Women & Investing – No Longer A Paradox?
Happy Women’s Day to all the lovely women!!
After having received numerous mails from the lovely women folk prodding me to write on investing for women, I believe, it is perfectly befitting to address this topic on the eve of Women’s Day. This article is dedicated to all the women out there who aspire to become rich.
Why Should Women Seek Financial Independence & How I Achieved It?
Financial dependence can cripple a woman – Some women get stuck in bad marriages till death and some are then at the mercy of their children in their old age. So, it is of paramount importance that we women are financially independent.
Since my first job at Standard Chartered, I managed to save a sizeable portion of my salary and invested a chunk of it directly in the stock market, thanks to the learnings from my mentors and the MBA course in Jamnalal Bajaj. I practically experienced that the right stock picks backed by elaborate research can do wonders for wealth creation. The outcome was that at a relatively young age, I had quite decent savings which then gave me the leeway to quit my job, pursue my passion and become an entrepreneur – An Investment Advisor.
“My husband, father, brother, son manages my money!”
The traditional view has been that women & investing are oxymorons – Being a woman Investment Advisor, this gender stereotype clearly infuriates me. In my role as an Investment Advisor, I have had the privilege to interact with several women – working women, mothers who quit their professional careers, NRIs, women entrepreneurs, homemakers, retired women, etc
It was common to hear from all these women – “The men in my house manages my money.” Nothing wrong in that! With ~75% financial illiteracy rate in India, the truth is that both men and women may be under-equipped to take informed financial decisions.Ergo, relying on the men for wealth management could also lead to sub-optimal decisions as his competence may lie in his profession and not investing. Also, the perception of the above oxymoron seems misplaced.
Millennial Women – A New Approach to Investing & Stock Markets
Traditionally rich women have become wealthy mainly by being born or marrying in a wealthy family as the culture of working women was not widespread. However, based on my experience, the millennial, contemporary, urban, modern woman has taken charge of her finances, is savvy and is looking beyond FDs, gold and real estate as an investment option. She has started warming up to direct investments in stock markets in a big way! I am delighted that some of my biggest customers invested directly in the stock markets are women & that they are way more patient and disciplined than their male counterparts.
The Story of 2 Women’s Wealth Journey
Urvashi Shah graduated from her B-School in 2008 and joined a technology consulting firm at a salary of Rs. 11 lacs. She made it a point to invest 25% of her salary in stocks, 25% in fixed deposits and the remaining 50% was available for living a comfortable life. She never bought a house and preferred to stay on rent with her husband. Over the last eight years, Urvashi has invested Rs. 25 lacs in stocks and Rs. 25 lacs in fixed deposits. Her stock portfolio has grown to Rs. 90 lacs and her FDs are worth Rs. 40 lacs as on date.Through her investments, Urvashi has created an additional income of Rs. 80 lacs over the past eight years!
Nitisha Singh too graduated in 2008 and joined a FMCG on a salary of Rs.12 lacs. She lived a simple life and saved ~60% of his salary. After having managed to save Rs. 30 lacs in the first four years of her professional life, she decided to buy a house. She used her savings for making the down payment and took a home loan of Rs. 70 lacs. Fast forward to 2016, Nitisha has little savings as she periodically prepays the home loan. She has an outstanding loan of Rs. 40 lacs and a house whose worth is Rs. 1.2 crores. That takes Nitisha’s networth to Rs. 80 lacs (Rs. 50 lacs lower than Urvashi).
One can easily figure out that Urvashi’s portfolio will give her an additional income of Rs.18 lacs every year (assuming a modest 15% return) while Nitisha will have no additional income except her salary. The networth difference between Urvashi and Nitisha is only going to increase with time. Urvashi’s position is so strong that she can buy Nitisha’s house without resorting to a loan. But she is smart enough to realize that real estate market is in a long term slowdown while stock market is in an uptrend.
PS – Both are real life stories and names have been changed to protect their identities
How Can You Embark on the Wealth Creation Journey?
- Do It Yourself (DIY) –
It is a slow, daunting and time consuming process to read and understand the glut of information and options (there are > 2,000 mutual fund schemes & direct stocks). Based on my experience, most individuals are too busy in their own professional and personal life to be able to have the time and inclination for this exercise.
- Avail Professional Help–
Just like when you fall ill, you visit a doctor, you can avail the services of a financial doctor/ financial advisor for managing your personal finances.
Feel free to write back to me your thoughts on this topic or in case you wish to know more about investing.
SEBI Registered Investment Advisor
GreenEdge Wealth Services