Are we an insecure lot?

Not many educated women would want to concede to that question. But then why is it that so many women are insecure when it comes to investing? Especially when they pay the bills, cut the college tuition checks and are the ones to shop for better deals?

I think women lack a great deal of confidence when it comes to investing mainly because of their aversion to finance plus, they think it is men who are better at maths and analysis.

Take the example of my friend, Sana. She works in the HR department of a reputable multinational company and takes home a decent salary. She often juggles between family and work which leaves her little time to manage her finances. While she brings home a decent package, she often discusses about her inability to invest because she is not at all confident on some of the basic things like how to save, where to save and how she can grow her money, and so on. I can’t say whether her gender has something to do with her fear or her lack of knowledge. Her money is lying idle in her savings bank account fetching her very minimum savings rate, when inflation numbers are drastically increasing. She prefers her husband to take the lead when it comes to managing money.

Many women find themselves in the same situation as Sana. Though women are actively participating in the workforce in a major way and are earning good income, they do not take much interest in managing their money.

I feel women also find that there are interruptions due to marriage, child birth, transfer of spouse, ailing elders in the family who need constant care, and the list can go on and on. This leads to women leaving the workforce from time to time. They look for flexible work timings or part-time work and compromise on their earnings, once the criterion is met. Hence, their earnings don’t match their true potential. In such cases it is even more important to know how to invest your money safely and earn good returns.

As the financial world is getting increasingly dynamic and complex, in my opinion, the best way for women to become more responsible and take the right financial decisions is through self education or getting advised by a trusted expert on basic money concepts and financial decisions.

I think for women who want to invest, but don’t know how to get started, they should start investing in plain vanilla income products as they are simple to understand and will give them regular income. The safest could be a long-term route, being a low-cost, diversified portfolio. Gold is a good choice as investing in gold can also boost the portfolio.  It serves as a safe haven against volatile markets. Another option could be investing in bonds like national saving bonds as they are considered a good investment for risk-averse. Investing in blue chip companies stocks is again a great idea, which gives regular dividend income like Fauji Fertilizer that has a history of giving 4 dividends a year.

But if you are new to investing you might not know how to pick stocks, for example, then you can put your money into mutual funds.  A mutual fund is a pool of investment created by an asset management company to make it easier for investors to invest their money without having to do research for themselves or even having large sums of money. They then take the money from all their investors, conduct their own research, and then invest the money in a variety of different investments.

Once women get comfortable with the concept of savings and investments, they can be gradually exposed to equity related products.

As objectives of every woman varies, it is important for her to make financial decisions based on her financial situation, life stage, risk-taking ability and her goals.

As we see, married women generally have a second income from their spouse so they can afford to take more risks and invest in medium to long term products for their long term needs like retirement, child education. Those unmarried would generally be investing to take care of expenses or cash flows and accordingly, may invest in relatively less riskier and regular income products. A single parent may also need to factor in the future security for herself and her dependents, and hence may invest in extremely safe products and possibly also consider buying protection for herself.

I strongly feel that every woman should get over the aversion to money, and understand the basics of handling finances. For this, read newspapers, magazines or websites. Involve a good financial advisor rather than just relying on family members for advice. This will help in avoiding any unforeseen problems in the future.

Women, if you still haven’t taken enough control of your own financial health, start now! Better late than never.

The writer is a part time business executive and a full time homemaker.