Wealthy Wednesdays: Investment tips for the single woman

Wednesday, 18 June 2014 - 8:24pm IST | Place: Mumbai | Agency: dna

Nirmal Rewaria, Head Financial Planning, Edelweiss shares his knowledge
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There are investors of all types – students, youth, married men planning to start families, men with existing families and so on. The one category that does not quite enter the limelight is the single woman, probably because investing is often misunderstood as a male-related activity where women have a limited role to play.

To be sure, investing is not gender-related. Anyone who earns money needs an investment game plan so as not to fritter away the money and employ it in a way to achieve tangible goals.
The woman’s investor category embraces several age groups and profiles; the single woman, who could be in her 20s looking to get married, a widow or a divorcee with or without children.  Each case entails financial implications of a different kind based on the investor’s desires and aspirations. To begin with, hire a financial planner, who's a master of the domain.

However, regardless of the specific circumstances of the case, broadly there are certain points that women investors need to bear in mind.

List down all financial responsibilities
The first step is to list down all financial goals , which you want to achieve. While there are many, here are some important one
i. Child’s education if you are widowed/divorced
ii. Outstanding EMIs (equated monthly installments) on the house purchased by the deceased husband
iii. Down payment for a house you wishes to purchase at some time
iv. Your retirement
These are a few goals, but they could vary based on the investors circumstances.

Have an investment plan for each goal
The next step is to prepare an investment plan targeting each goal. For instance, going by the sample list from the previous step, there must be a separate investment plan for your child’s education, your home purchase, your retirement and so on.

Go the Systematic Investment Plan (SIP) way
Investors have much to benefit by putting aside a fixed sum of money regularly towards their investment goals. Or they could opt for a SIP. With a SIP, investors give themselves a better chance of meeting their objectives.

i. are automatic. You can even instruct your bank to debit a fixed amount at periodic intervals
ii. are light on the wallet
iii. allow investors to benefit from Rupee cost averaging, which means that the cost of investment reduces over a market cycle as opposed to investing all at once
iv. eliminate the rather impossible task of timing the market and instead focus on ‘time in the market’.
Opt for equities for long-term, debt for short-term
One question that all investors have is – should they opt for equity or debt?
i. It is not equities OR debt, rather it is equities AND debt. Both are critical to the portfolio and even more critical is the allocation between equity and debt. Take advice from your financial planner on what works best for you.

ii. If you have a financial goal that is less than 3-5 years away, opt for debt investments. Equities are good for long-term (5-10 years). If you have a horizon that is long for e.g. retirement planning or child’s education then equities must form part of your portfolio, regardless of whether you are risk-oriented or not. If you plan to go for an annual pilgrimage next year, then pick a fixed deposit.

Save for emergencies
Everyone must set aside some money towards emergencies. It could be anything from job loss, accident involving you or your car or your child to urgent house repairs and so on. Emergency funds can be invested in a short-term fixed deposit and must include six to nine months' salary.

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