It is common for women to assume that their income is secondary or meant to be spent/used on expenses/EMI. But what they forget is that this will not leave them with much money or assets in their name. This is not an ideal situation. With limited resources, women must focus on a few key financial issues and products that impact their lives.
Flexible time deposits
Confidence comes from preparation. In an emergency, most women do not know how to obtain pension funds or insurance information. While staying on top of family finances is imperative, having your own emergency fund is a must. Store six months of expenses in a flexible, easy-to-access time deposit. The advantage of bank deposits is that you can also take short-term loans up to 90% of the value of the fixed-term deposit. These loans can be taken out quickly and easily online. Remember that flexible deposits are good for short-term investments, but they don’t work well for financial goals of more than 3 years.
Super Health Supplement
Adequate health insurance coverage is essential. Do not rely solely on insurance coverage provided by your employer. Also, take out external medical insurance. Considering the cost of treating serious illnesses, medical insurance (which can also be taken out as family insurance) of Rs 15-20 lakh is recommended. A cheaper way to get health insurance is through super supplement plans.
A super recharge offers health insurance at a very low cost, to be paid by yourself. So if you have coverage of Rs 10 lakh with a deductible of Rs 1 lakh, you will have to pay the first lakh (cumulative) on claims throughout the year and the balance will be covered by the insurance company.
Active Equity Option in the National Pension Scheme
The way women view retirement has changed over the years. Early retirement is the order of the day, and retirement is all about pursuing your interests and filling out unfinished wish lists. Therefore, a mere investment in traditional instruments such as the employee pension fund or the public pension fund will not contribute to building the necessary corpus. If she is 30 years old today and has expenses of Rs 50,000 per month and wants to retire at 50, she needs a corpus of Rs 3 million and needs to invest Rs 48,000 per month. Let’s say she can invest Rs 25,000 per month. This amount invested in EPF alone will grow to Rs 1.58 crore at the age of 50. But the same amount invested in NPS will grow to Rs 2.50 crore (assuming a 12% annual return). Of course, you can choose a mix of EPF and NPS to balance risk.
The equity component can be purchased through the active ownership option of the National Pension Plan, a low-cost retirement plan. The NPS is a great way to save for retirement because it forces you to invest with discipline each year and with funds tied up until age 60 it helps you accumulate money. The active equity option is recommended as it offers high equity exposure throughout the investment period, enhancing total return.
Flexicap, midcap and index funds
Women hate losses and avoid action. But traditional investing doesn’t outpace inflation, so don’t let your money grow. In addition, the value of financial goals is high and, in most cases, people do not have the amount necessary to invest to achieve financial goals. Still, if you want to achieve long-term goals, you should have at least 30-40% equity exposure.
But choosing between stocks is confusing. Imagine that you have to find out which stock to buy among the 4000 stocks listed in India. Make better use of your time and money by investing in mutual funds where the fund manager rates the stock. But with 12 different stock classes and more than 350 mutual fund programs, how do you choose the right stock fund?
Within equity funds, index, flexible-cap, and mid-cap funds have all produced consistent risk-adjusted returns over the long term, and a combination of these funds will provide good diversification.
Ladies, it is the process of managing money that counts in creating wealth. Make the right choice with the products listed above.