Warren Buffet rightly said, “You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ.”
Very often I hear women complain “I can’t understand stock markets they are too complicated”, “All this financial jargon sounds like mumbo-jumbo, I can’t waste my time”, “I never liked maths so how will I understand all these tax matters. I just let my CA handle it” and the most common excuse “I don’t have time, I have so many responsibilities on my head”
Then there are some women who also buy into the myth that men are better at investing than them and so depend on their husbands/brothers and other male members to invest for them. Remember, running away from taking charge of your finances will only create more problems for you in the near future.
Analysis done by www.nerdwallet.com has shown that women actually tend to be better money managers than men. This is most likely because women are better savers, less likely to constantly churn their portfolio and more willing to seek advice from financial advisors and follow it should the need arise.
But even if these reasons aren’t enough to motivate you, there is one factor that you simply cannot overlook; women on an average tend to outlive men. Hence at some stage women will need to manage their own finances. The sooner you take charge of your own money, the more time you will have to make informed decisions based upon your requirements.
People have a false notion that investing is possible only when one has loads of surplus cash. Many women in their mid twenties and thirties tend to believe that they are not making sufficient money and hence cannot invest. But this couldn’t be further from the truth. They do not realise the importance of investing from a young age and are unable to understand how sound investing can help them achieve a plethora of goals in the long run.
Remember everyone who earns a paycheque is capable of investing provided he/she makes it a priority.
There are certain simple guidelines we can follow to help us achieve our goals
1.Live within your means – We enjoy splurging on the latest gadgets, accessories or a dream holiday. But if we over indulge as is the general tendency in our youth we won’t have any savings left to invest. You cannot create wealth if you live beyond your means. This mantra can probably be summed up with the following quote:
A man is rich in proportion to the number of things he can afford to leave alone.
Henry David Thoreau
2.Take control of your life and finances – You alone are responsible for your financial health. Hence you must decide how much you want to spend and how much you want to save every month in order to achieve certain pre-determined goals. Remember if you start saving early in life you can achieve your objectives quickly
“A man who both spends and saves money is the happiest man, because he has both enjoyments” – Samuel Johnson
3.Become financially independent – Financial independence will make you more confident, improve your self-esteem and give you a sense of achievement. It will also help you achieve your dream-be it a fancy house, a foreign education, a swanky SUV or a luxurious vacation. More importantly you will not have to rely on anyone for your financial welfare. For many people their sense of self worth is linked to their ability to provide for themselves. When a woman is economically independent her quality of life improves, she makes better choices both for herself and her family and becomes more confident in every sphere of life. Every woman should focus on building her own investment portfolio and simultaneously take care of her financial wellbeing.
“You must learn to save first and spend afterwards” – John Poole
4.Invest small amounts and windfalls – The most effective way to avoid being battered by an unpredictable stock market is to invest small amounts of money at regular intervals. When you receive an un foreseen sum of money say a bonus, bequest or inheritance there is an inherent tendency to go and splurge it. Resist the temptation to indulge or overspend. Instead invest every such surplus. Remember since this windfall wasn’t anticipated, you are not depriving yourself if you do not spend it.
“If you buy things you don’t need, very soon you will have to sell things you need” – Warren Buffet
5.Take interest in your investments – the age old rule of ‘buy and hold’ may not always work in the long run. It is necessary to educate yourself and review your portfolio on a regular basis. If this is not possible seek the advice of a financial expert.
“Lots of people know how to make money, but are not gifted in the art of preserving it. Frequently the same risk that was involved in making you rich is the same risk that can make you poor again” – Fred J. Young
In the corporate world many women face the proverbial glass ceiling at some stage in their career. But the world of investing is free from such prejudices. The markets don’t care if you are a man or a woman, a housewife or a working woman, single or divorced, an MBA or a graduate. It provides equal opportunity to all to make money in the long run provided they take the right decisions using their skill and experience.
Investing can be done full time or part time. With the advances in technology, you can invest at the click of a button from the comfort of your home or office. You can even include your children in the investment process thus inculcating the habit of saving in them from a young age. Today investing is not just an option for women. It is an absolute necessity.
Start today, trust me you won’t regret it.
Contrary to popular perception, women tend to make sounder investment decisions than men. According to a 2010 study by Boston Consulting Group, women tend to focus on a longer time horizon and associate money with monetary security, financial freedom and improving quality of life. Men, on the other hand, tend to be highly competitive and adventurous and focus on a significantly shorter time span.
Women tend to be thorough and take more time to make decisions than men. Several studies, including a national survey by LPL Financial, show that women tend to research investments in depth before making portfolio decisions, and the process, as a result, tends to take more time. Women also tend to be more patient as investors and consult their advisors before adjusting their portfolio positioning, whereas men are more prone to market timing impulses. To gather information, women often prefer group discussions to men’s more independent learning approach.
Women seek help more. A 2012-2013 Prudential study on women investors reveals that women are more receptive to financial research and advice than men. They often require more of a financial advisor’s time and resources, but once trust is established they are also more loyal clients with their focus on lasting relationships.