If you put all your money in one stock, you will be at a high risk of incurring losses, especially at a time when market volatility is high and recession concern is looming large.
Women today no longer live in a world where it is believed that their prince charming would take care of all their financial needs and make their future financially secure. Today, women are giving tough competition to men in almost all spheres of life. Women empowerment to a greater extent begins with financial independence. In this article, we have brought 5 investment tips for working women which can help them have a secure future and manage their finances better.
5 investment tips that can help working women manage their finances better:
1. Set Your Financial Goals
Setting financial goals is vital to have a stable and healthy family life. Begin with your short-term goals such as planning finances for a vacation with family, higher education, a wedding or planning for life after retirement.
2. Plan your monthly Budget
Planning your budget should be on your to-do list as soon as you reach your late 20s. Remember that it is always good to start early because if you start saving and investing early in life, even with a small amount, the seemingly small amount will compound over time and become a substantial sum in the long run. Also, create an emergency fund for meeting unexpected events that may come your way – these can be sudden expenses on medical treatments, unexpected job loss and the list is endless.
A good mantra one can stick to is ‘Spend after you Save’ and not the other way around. By doing so, you can gradually create a healthy corpus for your retirement.
3. Do Have an Insurance
You would never want yourself to be in a helpless situation where you are dependent on others to fulfil your needs – why depend on your parents or spouse for an insurance policy? One of the most common mistakes young Indian women usually make is ignoring insurance.
Every working woman should opt for adequate life cover to protect their financial dependents to face any eventualities of life. In this case, the Term insurance plan fits in to provide the best adequate life cover. It is like an instrument for income replacement. Once someone starts earning and has financial dependents, it is advisable to get insured. Women should consider getting a health insurance plan, as good health can also contribute to you achieving great heights in your career. Health insurance is also important if one calculated the yearly out-of-pocket expenditure on healthcare.
4. Have a diversified portfolio
You must have often heard it is not wise to put all your eggs in one basket- If you put all your money in one stock, you will be at a high risk of incurring losses, especially at a time when market volatility is high and recession concern is looming large. Instead, should invest in stocks of diversified sectors. If you have a diversified portfolio and have invested in shares of companies operating in different sectors, then in that it will save you from losses if one sector is not performing well. This is because in this case the losses made in one sector will be compensated with the gains made in the other sector. Thus, adding diversity to the asset classes will improve the potential of earning stable returns and splitting the risk.
5. Go for tax-efficient investments
Tax planning is very crucial to save money. Your goal should be to maximize your after-tax savings returns and you have to have a successful tax strategy to achieve this goal. The three fundamental tactics for a successful tax strategy are Timing, income shifting, and conversion. Try to get as much information as you can about the taxes you’re paying. Also, learn everything about tax benefits that are available and which can help you save more. Though we make an investment in financial products to get an attractive return on investment (ROI), we often ignore the impact of taxation on the returns. The calculation is restricted to the rate of capital appreciation over a period. The tax deducted from the accumulated corpus can have a significant impact on the final returns. It is therefore important to invest in tax-saving instruments. One such tax-saving instrument can be ULIP. A unit-linked insurance plan (ULIP) is one of the financial instruments with exposure to markets-linked returns and is best suited for those who want to save for the long term and also require life protection.
