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.
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:
"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?
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
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:
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.
When building a portfolio, it is important to have a framework to help make the right investment decisions.
"Don’t look for the needle in the haystack. Just buy the haystack." - John Bogle
(an American investor and philanthropist)
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:
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:
Open a US brokerage account. Doing so is a relatively straightforward online process
Identify your financial goals and accordingly determine your investment budget
Transfer the funds from your bank account to your US brokerage account
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
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.
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