Foster the invest(h)er in you!

The world is full of exemplary performances and accolades for women in every field they have set foot in - politics, sports, defence, law, philosophy, business, history, chemistry, astronomy, and many more. However, when it comes to investing and managing finances, research shows that women are not comfortable with investing and keep more than 70% of their assets in cash. 

What are women investing for?

Financial independence and security mean being able to pay for the way you want to live without having to work till the end of your life or rely on others for it. In other words, it means being free and self-reliant. Historically, women have been less likely to invest as compared to men, but that is changing fast, and women are making use of the available resources.

A taxpayer platform in the country revealed that the tables are turning, and women are investing 12.7% more than their male counterparts. Research by Merrill Lynch shows that 41% of women are more inclined to invest now as compared to earlier. Some of the main reasons behind women striving for financial independence are as follows:

• Financial Stability - As a woman, it is important to achieve a sense of financial equality and independence. The gender pay gap, the pink tax, and many other prejudices have historically created a discrepancy between the financial situation of women and men. Investing is therefore one of the best ways to ensure that one is as financially secure as their male counterparts. It is important to have financial security to be able to walk away from situations that are toxic and saving money to create wealth helps create a cushion and take care of oneself better.
• Achieving financial goals - Whether it is a plan to go back to school or that emergency fund for your parents, sending your kids to college, or just be able to take that dream vacation or a sabbatical you want, investing is one of the best ways to accumulate and grow wealth to reach those short term and long-term goals. 

"People say that money is not the key to happiness,
but I always figured if you have enough money, you can have a key made." - Late Joan Rivers (Talk show host) So, have you got your key made, yet?

Build a corpus by starting early and investing consistently

To build wealth to help achieve your financial goals, it is important to become more cognizant of your investment behavior. The best approach when it comes to investing to create wealth is to start early and invest consistently over a long period. There is never a “right time” to start investing as it is almost impossible to time the market. Therefore, when thinking about investments from a long-term perspective, one must be investing frequently and consistently. 

"Take measured risk." - Doris P. Meister

Women are better investors 

Research shows that despite women generally thinking men make better investors, the opposite might be true. Fidelity Investments analyzed over 8 million client accounts and found that women tend to outperform men in terms of generating a return on their investments. Contrary to their perception that women might not be as comfortable or adept at investing, women have proved to be successful at investing, driven by traits that some people view as being inherently female: 

• Women plan their investments from a long-term perspective with financial goals in mind rather than focusing only on performance, which ensures that they hold stocks from a long-term perspective rather than trying to time the market and generate higher returns by buying and selling during market fluctuations. 
• Women are more patient investors and don’t trade too frequently. On average, they traded 35% less as compared to their male counterparts.
• Women take on less risk when it comes to investments, which ensures appropriate asset allocation and diversification, leading to more stability and better financial outcomes.
• Women are more likely to ask for help when it comes to investing and managing finances. Surveys revealed that 60% of men think that their knowledge of investments and the stock market is foolproof. And women asked questions and sought professional advice 45% more than men. This ensures that they are more equipped to handle any potential hurdles in their path.

These are the fundamentals characteristics of a sound investment strategy for building wealth in the long term. As a result, the research found that women were saving a larger portion of their salaries and earning higher returns on their savings. It is therefore important to plan with purpose and specific financial goals in mind, be patient with investments, and most importantly focusing on building a robust portfolio.

Take sound investment decisions via 'Guided Investing'

When building a portfolio, it is important to have a framework to help make the right investment decisions. 

• Identify your goals: The starting point of every investment decision should be identifying the underlying goal behind investing. If you are focused on securing a steady stream of income for the future or saving for your children’s education, your investment decisions will differ. It is therefore important to first establish the objectives with which you are investing and managing your portfolio.
• Build the right asset allocation: The second step in creating a well-balanced portfolio is choosing the right mix of investment categories such as stocks, bonds, and cash. This reduces the risk of loss and increases the chances of higher returns on investments. 
• Diversify your portfolio: Diversification across assets, sectors, and geographies helps in reducing the risk of losses. Global investing has gained considerable momentum in the past few years and investing in international markets helps diversify the portfolio.
• Rebalancing your portfolio periodically: As the market moves over some time, holdings in the portfolio are likely to perform differently, leading to deviations from your target asset allocation. It is therefore important to revisit the target allocation and rebalance the portfolio to re-align it with your investment goals.
• Evaluate new goals and review your investments on an ongoing basis: It is important to periodically redefine your financial goals as your situation in life changes, and accordingly review your portfolio and make the necessary adjustments to ensure it continues to work towards achieving your financial objectives. 

"Don’t look for the needle in the haystack. Just buy the haystack." - John Bogle
(an American investor and philanthropist)

Globalise your capital for international exposure 

As you look to build a diversified portfolio, it is important to consider the US markets. With this access to international markets, you can create geographic diversification. Additionally, with a broad choice of ETFs and index funds available, you can easily take exposure to the broader equity markets that are historically less volatile and do so at a low cost. A few further advantages of investing in the US market are:

• Buy the world's most innovative companies and participate in the growth of global leaders like Apple, Amazon, Microsoft, and Tesla.
• Buy companies you use and love like Starbucks, Nike, Estee Lauder, and Disney.
• Invest in emerging themes like artificial intelligence, clean energy, and biotech which are not available in India.
• Avoid concentration in India and an adverse impact from India-specific shocks.
• Protect your portfolio from a decrease in the value of the rupee vs the dollar.
• Save in US dollars for overseas expenses such as children’s education, travel, and medical expenses.

Once you are ready to invest in the international share market and US market, here is a step-by-step process of how to proceed: 

1. Open a US brokerage account. Doing so is a relatively straightforward online process

2. Identify your financial goals and accordingly determine your investment budget

3. Transfer the funds from your bank account to your US brokerage account

4. Identify the investments you want to make. You can either do the research yourself or rely on guidance that is available in the form of recommended ETFs and curated portfolios

5. Monitor your portfolio for some time and make the necessary tweaks to your portfolio

This is to all the women out there, now is the time to foster the investor in you and take the first steps towards financial independence. Start investing, no matter how small the amount. Identify your financial goals and plan your investments accordingly. With the new-age platforms that are available, you have the opportunity to take control of your finances and build your wealth to secure your financial future. 

A version of this article was published on Telegraph.