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Empowering Indian women through financial independence

Monday, November 21, 2016
By Anjali Malhotra

Anjali Malhotra
Chief Customer, Marketing & Digital Officer, Aviva India

The modern Indian woman today is breaking age-old barriers, meeting new challenges and embracing new responsibilities, both personally and professionally. One of the important element that make the modern woman a symbol of strength, versatility and independence is being financially self-sufficient. To establish her identity and individuality whether at home, work or society, it is imperative that women free themselves from financial overdependence on family members, and also guard against dire situations like divorce, death or family rift.

This is where sound financial planning plays an important role for a woman in securing her life and the lives of her loved ones. Today, it is neither necessary nor wise to rely solely on traditional savings to meet one’s financial goals. Several options are available for modern women, from insurance products to systematic investment plans.

Here are 10 things women should consider to become financially strong and independent.

Financial planning
One must define a clear and realistic financial goal. All your financial requirements, right from your child’s education, planning a comfortable retired life, to securing your future against unforeseen circumstances, call for meticulous planning. It’s critical to factor in inflation while drawing up your financial plan. If you are planning your child’s education, you should be aware that a professional degree that costs Rs 4 lakh today, will cost Rs 20 lakh, 10 years from now, and hence, invest accordingly.

Personal research
While a qualified financial planner can give you investment advice, the importance of doing your own research cannot be undermined. There is plenty of information available on the internet on the pros and cons of each financial instrument. For example, if you are looking at buying a medical cover for your family, there are websites that help you compare features and prices of various medical insurance products to help you make an informed decision.

Personalized financial plan
A common mistake among investors is to opt for a particular plan or product simply because others are doing so. An investment plan must be customized according to personal factors such as one’s risk appetite, financial goals and life-stage needs.

Adequate time horizon
It is necessary to align the investment plan and the expected time frame for getting returns out of it. It is irrational to expect immediate returns from a long term product. The various investment instruments that are available in the market like insurance, mutual funds, FDs, PPF, come with varying timelines. For example, if you invest in a fixed deposit (FD), you may get your amount back in 2-5 years, depending on your lock-in period. However, insurance is a long term proposition, and a person investing in an insurance plan will get the benefits after a longer period of time. Applying these know how will help you plan your investments accordingly.

Risk diversification
A smart investor would always ensure that the risk is distributed over a variety of instruments. A high risk instrument such as, an equity should ideally be balanced with a stable one such as bonds. Your investment portfolio should be a judicious mix of equity, debt, life insurance, commodities, real estate etc. At the same time, investment in each of these should be attuned to your financial goals and risk appetite.

Planning for unforeseen events
While you draw out your investment plan basis the current assessment of your future needs, the element of unexpected events must also be factored in. As a woman, it is crucial to be financially prepared to deal with unfortunate events like death, divorce etc. Today, sudden circumstances often force women to take sole responsibility of children, parents etc. In such situations, your investments will come to your rescue and take care of you and your family’s needs on the basis of your income alone.

Regularly track your investment
It is common to become complacent and expect the returns to flow in, once the investments are done. However, it is every investor`s responsibility to keep a tab on the performance of their portfolio. For example, if you have invested in a Mutual Fund through a broker, you must proactively enquire what stocks your money has been invested in and be aware of the performance of the same.

Proper paperwork
There have been several instances where an investor is unable to claim returns from a bona fide investment simply because of misplaced or wrongly-filled documents. Proper documentation is a must to safeguard your investments and ensure that they continue to deliver returns, as planned.  It is equally important to ensure that someone other than yourself is fully aware of the investments, the terms and conditions and related documentation.

Securing your future
Even if you are not the chief bread earner, as a working woman you contribute to the income stream of your family and help in maintaining a certain lifestyle. This makes it crucial for you to have adequate insurance to ensure that in your absence your family does not go through any financial stress. There are online tools on insurance websites that help you decide how much cover is essential for you. In fact, investing in a simple term insurance plan is a good idea to ensure financial continuity. Also taking a pension plan will help to provide a steady income post retirement.

Plan and execute
Last, but most important is to put the plan you have drawn up into effect. It is only natural to be complacent about planning for your long term financial needs at an early stage in your career. However, the cost of postponement will weigh heavily on you in the later years when investing will become a compulsion rather than a choice.

Once you follow these steps and have a solid investment portfolio, you not only safeguard yourself financially against unforeseen circumstances but also ensure that the future of your loves ones is secure.

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