This Women's Day, take charge of your portfolio

When it comes to investing money, I have noticed one thing when helping families plan their finances. It is that there are many women who delegate all the decisions regarding the management of their own money to someone else.

Today is International Women’s Day and therefore this is the right time to discuss about why it is very important for women to take greater charge of their money.

Although the mutual fund industry has seen its assets grow many fold over the last few years, the penetration of financial assets in the population is still very low.

What’s worse is that the gender balance, when it comes to making an investment decision, is skewed towards men. DSP conducted a Winvestor Pulse Survey in 2019 which found that only 33% women make their own investing decisions compared with 64% of men.

Broadly speaking, from the survey, the top financial priorities of men and women are similar: they include saving for children’s education, planning for buying a house, looking for a higher standard of living and aiming for a debt free life. However, there are some differences between men and women within that. More men aim to start their own venture and plan for retirement than women. And, more women prioritise goals oriented toward children than men.

If the financial priorities of women are slightly different from men, shouldn’t they also play a greater role in how their own money is invested? After all, it is very important for investments to align with the financial needs of a person. This becomes even more necessary when you take into account things like the gender pay gap, different career and lifestyle choices and the fact that women live longer than men.

Let’s take, for example, a father who wants to save for his daughters marriage, but the daughter might be more interested in saving up for a better education. Both of these goals have different time horizons and require different amounts of money. And that’s why the investment instrument and savings plan that is appropriate for what the father wants may be totally different from the instrument that would help his daughter achieve her financial goals.

Planning your finances properly plays an important role in helping anyone feel independent. It helps to build security and dignity and means that you don’t have to feel reliant on anyone else. This is why it is critical for women to play an active role in the management of their money. If they are not involved in the conversation, then how will they achieve their own financial goals?

Having an independent source of income is a good start, but it is not enough.

Here are four things you can do to take control of your money:

— Create a budget: Jot down your income and expenses and ensure that you cut down on unnecessary purchases so that you can maintain a healthy savings rate

— Start building an emergency fund: this can go a long way to protect you in times of difficulty

— Get to know your family finances: It is very important to be aware of not just investments that have been made and executed by family members, but also to have an understanding of loans and dues that family members may have. It is also important to understand in whose name the investments have been made and where the paperwork for the investments is kept.

— Create a list of your financial goals: Make a list of how much money you need to save up for each goal you have and the time before which you need the money. Create a plan to meet these goals and start working toward achieving it

When it comes to investing money, only 12% of the women in the DSP Winvestor Survey said that it is 100% their decision when investing in products like stocks and mutual funds versus 31% in men. This is 2.6 times lower. And, 67% of women do not take final investment decisions all by themselves versus 36% of men.

On this Women’s Day, it is time to make a change to this and for women to become more involved in the decisions around managing their money.

(The writer is founder and MD, Kairos Capital, Views expressed are personal)