Where should a woman invest?

IF Carrie Bradshaw (played by Sarah Jessica Parker, in the popular HBO television series, Sex And The City), is your idol, this is just what you need to read.

Like her, you are young, footloose and fancy-free, making enough money to have a great life and thoroughly enjoying your independence. Perhaps you will think about helping your family later. But, right now, if you are doing any investing, it is only because of taxes.

You are not interested in building wealth and creating assets because you will probably do that once you settle down with the man of your dreams.

A piece of advice: don’t elope when you find him because it may not be as romantic as it sounds. All family support systems may be cut off besides a possible partial or total erosion of all savings, not to mention emotional stress after the short-lived excitement.

This is, no doubt, a financially lucrative phase made all the more enticing due to lack of commitments and complete freedom to spend your money the way you wish. But you cannot possibly spend it all because, remember, your financial resources are your strength. They will help you be independent.

So don’t swipe that card like a maniac, or you will feel your financial strength ebbing away.

What does a modern day woman do to handle her financial life? How do you invest your money? Here are a few tips:

i. Put 90 per cent of your earnings into wealth generating instruments such as shares and equity mutual funds. Since women are not traders by nature and have the patience to see the fruits of investments, they can make most of this avenue. But understand a bit about risk management first.

ii. Place about 10 per cent of your proposed savings into bank deposits or similar. Unlike single men, a woman should never be broke.

iii. Invest in life insurance prudently, and only if you have dependents on your income.

iv. Stay away from fixed investments such as Fixed Deposits, Public Provident Fund, National Savings Certificates, etc. Your goal is to build wealth, say, by the time you are married, which may be about three to 10 years away. These instruments will not serve your medium term purpose.

v. If you are looking to get married, do ask questions to gauge how your prospective partner manages money and, more important, how he saves.

vi. Women are born with a softer streak so excessive gifting/helping is second nature. But avoid going overboard here.

vii. Beware of women-oriented offers/products such as credit cards, insurance and the like. They may be expensive or regular products repackaged.

Doing the above will take you no more than a week. So stop that partying for a week. With your finances sorted out, the party will not stop for the rest of your life. With or without your husband.

Author: Kartik Jhaveri
Source: Wealth, MoneyControl