The narrative surrounding women and finances is undergoing a remarkable transformation in today's world. Women are boldly taking on leadership positions, shattering barriers, and making remarkable progress towards equality in numerous areas. Nevertheless, there is still progress to be made when it comes to financial matters. Encouraging women to embrace investing is a vital step forward. It is high time for women to take charge of their financial destinies and work towards achieving independence through wise investments.
This article talks about why it is important for women to take charge of their finance and walk towards the milestone of achieving financial empowerment. Let us understand the importance of investing:
Bridging the gender gap
Despite the advancements made in recent years, there continues to be a notable disparity in wealth between men and women. Investing offers women, a chance to narrow this gap by increasing their wealth gradually. By actively participating in the management of their finances, women can establish a more stable and prosperous future for both themselves and their families.
Also Read: Find out how Indian women wish to close gender pay gap while ensuring work-life balance
Achieving financial freedom
By engaging in investments, women can achieve financial freedom, enabling them to pursue their aspirations independently without depending on external financial assistance. Whether it involves launching a business, exploring the globe, or enjoying a secure retirement, investing equips women to steer their own destinies.
Overcoming inflation
While storing funds in a savings account may appear secure, it frequently lags behind inflation rates. Opting to invest in assets such as stocks, bonds, and real estate presents the opportunity for greater returns, enabling women to safeguard and enhance their buying power in the long run.
Also Read: What are 5 Ps to help you achieve financial freedom?
Overcoming barriers to investing
Lack of financial education: A lot of women may feel overwhelmed when it comes to investing due to their limited understanding of financial markets and investment strategies. To overcome this obstacle, it is important to seek education and empowerment. Various resources like books, online courses, and workshops can offer the essential knowledge needed to begin.
Fear of taking risks: It is a well-known fact that women often exhibit a greater aversion to risk compared to men, causing them to hesitate when it comes to making investment decisions. However, completely avoiding risk can actually hinder the achievement of long-term financial objectives. By comprehending one's risk tolerance and diversifying investments, one can effectively mitigate fears and cultivate a sense of assurance in the realm of investing.
So, how can women concentrate on becoming financially independent through investing?
Setting goals: A good financial plan should be built on knowing your life goals, the money required to achieve them, your willingness to take risks, and the time it takes to reach those goals. Once you have a clear understanding of your financial goals, you can create an investment portfolio that considers asset allocation, regular investing, and the benefits of compounding.
Also Read: This is why you should invest as an investor, and not as a woman
Creating a budget: Develop a budget using various budgeting techniques like the 50/30/20 rule (50% for needs, 30% for wants, and 20% for savings). Select the most suitable method that will work best for you.
Build an emergency fund: Secure your financial future by establishing an emergency fund with a sufficient amount of money, typically 3-6 months' worth of expenses, in a dedicated savings account. This prudent step will shield you from unforeseen circ*mstances such as sudden unemployment or unexpected medical emergencies.
Get insured: It is crucial to obtain term insurance for financial security and health insurance for medical crises if you have dependents to avoid any uncertainties in life.
Build a diversified portfolio: Diversifying your investments is key to achieving financial success. Spread your investments across different asset classes to minimize risk. It is advisable to consider the equity mutual funds route, which offers a diversified portfolio and allows you to adopt a systematic investment plan (SIP) approach. This approach not only minimizes risk but also promotes discipline and ensures long-term profitability.
Remember, the journey towards financial independence may have its challenges, but with determination and perseverance, every woman can chart her path to a brighter financial future.
Nehal Mota, co-founder of Finnovate
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Published: 20 Mar 2024, 10:28 AM IST
