Investment and savings go hand in hand. You need to start early.

Financial planning is seen as a troublesome venture for most career women. Many depend on their spouses or parents to take sound financial decisions on their behalf, without which they’re unaware of their saving potential, the best possible investment options available to them, and how to track these investments once they’re made.

A recently-conducted study done by Way 2 Wealth, a financial consulting firm in Bangalore city, revealed the following:

* Of the target group consisting urban career women, more than half (55 per cent) were married, and their spouses suggested their financial investments. Dependents like children were taken care of jointly.

* When it came to savings, a majority of the women had savings between 20 per cent to 30 per cent. These were most often than not the single women with no dependents.

* Out of the 13 women whose savings were 10 per cent and below, three to four women had absolutely no savings at all!

Delayed saving
For the most critical qustion of, “reasons for delaying investments”, their answers ranged from unexpected expenses cropping up and high standards of living, to a lack of knowledge of sound financial tools.

Despite this, most women when asked about their financial goals answered — first owning a house (65 per cent), then having sufficient savings or an emergency fund (33 per cent) and last, owning a vehicle (32 per cent).

Investment options
Given below are examples of career women and investment options, as per their earnings...

1. Ms A, single working woman, 29 years old and living alone in a rented apartment. She has a working mother (a teacher) and no dependents as such. She works in an MNC and draws a monthly income of Rs 20,000 to Rs 25,000. Her savings constitute five per cent per month as she spends an average 15 K.

She has no investments except for a life insurance cover for tax-saving purposes. Her common reasons for delaying investments are lack of money, and no proper product information. She has not heard of investment consultancy firms either but expects complete portfolio managment from one.

Recommendation
Ms A should opt for a systematic investment plan (SIP). The SIP allows you to invest a fixed amount every month in mutual funds. It’s a lot like a recurring deposit scheme. The SIP ensures that whether the market is up or down, the end result averages out to ensure that the returns are better than the market average.

She should take the income funds, ie investing largely in corporate bonds yielding a steady income with medium return potential. This plan is ideal for one year and the possibility of fluctuation in value is low. Taking into consideration the fact that she is young and has no dependents, she can increase her risk gradually by investing in shares for higher returns, thereby shifting from an income fund to a balanced fund.

2. Ms B, 30, a married woman, has no children and her spouse is in the financial sector. She draws an income of Rs 40,000 plus and saves approximately 15 per cent with expenses ranging from Rs 20,000 to Rs 30,000. Her common reason for delaying investment is over-spending and it’s her husband who takes care of everything including her savings. She also needs to do her tax planning.

Recommendation
Since Ms B has no commitments, high earnings and a high tendency to spend, she too, like Ms A, can opt for a systematic investment plan (SIP) as her savings are only 15 per cent. But unlike Ms A, she should opt for growth or equity funds as this would ensure that her investments are made in shares for long-term capital growth, ie for five years, with a high return on capital and equally high possibility of fluctuations in value.

3. Ms C is 21 years old and lives with her parents. She earns Rs 15,000 a month, and would like to save for her future — the wedding, for one. Her father has invested in a few national savings certificates, from the time she was in college, and rolls back the money after six years. But C wants to save more.

Recommendation
A reliable saving instrument today is the Public Provident Fund (PPF), where C can invest upto Rs 60,000 per year, and also avail of a tax rebate. She can follow this for 15 years, and extend it for another five. She can take a loan from the PPF after six years, and use it for her marriage or whatever contingency she may face. She should also look at Mutual Funds, which are a stable and consistent mode of savings.

When you get home today, begin stashing away, in the right place, for a rainy day. Seek professional advice, get accurate knowledge and analysis on available investment tools, and ask for a customised investment solution. It’s never too late to begin.

With Inputs From Farhana Shaikh’s ‘A Study Of Financial Planning For Independent Women’, Goa University, And Way 2 Wealth, Bangalore


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