5 Smart Investing Tips For Indian Women

A recent report by ETMONEY showed that Indian women investors are smart, savvy, and determined when it comes to investing their hard-earned money.

Whether you’re just starting out learning to invest money for beginners or are an experienced female investor, there’s always room for improvement in learning how to invest money for better returns.

In this article on women and investing, we share investing tips for Indian women to help you learn how to invest money for best returns and invest money for the future.

5 Smart Investing Tips For Indian Women

In this article, experts answer five frequently asked questions from Indian women about where to invest for the future.

These expert investing tips for Indian women will show you how to invest money for better profit.

1. What percentage of savings should you invest?

Should you invest a minimum of 30%, 50% or 70% of your savings? Ideally, you should be investing whatever you’re saving. That’s because you want your savings to grow and the only way to achieve that is by investing.

Remember to pick an investment product based on how much risk you’re willing to take. While we all want the highest possible returns, not all of us can tolerate the risk that comes with that approach.

2. Is investing in shares in your 30s better than investing in your 50s?

When you invest in shares, you’re essentially becoming part-owner of a business. The performance of that business will determine the returns you get.

How a business performs depends on a number of factors including the economic conditions of the country, and as we know, there are ups and downs in the economy and in extension business.

When we’re in our 30s, our long-term goals like retirement are far away, and so we can tolerate these ups and downs because we don’t need the money in the near future.

That might not be the case in your 50s. At that stage, you’re looking to make sure your gains are protected, so you can retire peacefully. So, always pick shares when younger. And the best way to do that is by picking Mutual Funds.

3. How much should your emergency fund be?

Should your emergency fund be equal to 3 month’s expenses, 6 month’s expenses or 12 month’s expenses?

You need to have at least 9 to 12 months of your expenses as your emergency fund. Do note that when you’re calculating your expenses you should cover not just your household expenses, but also all your EMIs, any premiums you might be paying, and other one-off expenses.

This ensures you have the money to cover all your expenses should an emergency, such as a job loss, arise. Also, you need to make sure that you review this amount every year and make modifications as per your current expenses.

Lastly, your emergency funds should be kept aside and not touched for funding any routine expenses.

4. Which is a smarter investment option - diamonds & gold Vs mutual funds & equity?

Diamonds may be a woman's best friend, but they are lousy investments. While you should buy whatever diamonds you want, please understand those are consumption items and are no different than buying a bag or shoes.

The same is true with gold jewelry also. That’s because both diamonds and gold sit in your locker and don’t work for you. The only reason they might increase in value is if there is more demand and less supply.

While diamonds and gold may seem attractive, they are not the best investment for women who want to invest money for best returns. Compare this to when you’re investing in equities via Mutual Funds.

When you invest money in mutual funds, you’re putting money into a business - an entity that is thriving and growing - and that will use your investment to grow their business and share a part of the profit with you.

For example, if you invest in an Equity Mutual Fund, which then buys shares of Reliance or Tata, you’ll benefit from the growth of these companies. This is why Equity Mutual Funds are considered one of the best high-return investment options in India.

5. What is the best way to invest money for long-term goals?

When you’re saving for a long-term goal like retirement, child's education, marriage, your objective should be to get returns that beat inflation and beat it well.

One of the most important investing tips for Indian women to keep in mind is that inflation is the biggest wealth destroyer and the primary reason you might not have enough money for your long-term goals.

Let’s take a few examples. When the Bollywood movie, Sholay, was released in August 1975, ticket prices ranged between INR 3.50 and INR 5.50 in Mumbai and Delhi. Today, you would have had to pay around INR 500.

That’s a 500% increase. Imagine what it would be like 20 to 30 years down the road. You don’t want to be in a situation where you don’t have the money because prices grew more than your investments.

Now, the only asset class that can beat inflation consistently over long periods of time is equities. For this reason, Equity Mutual Funds are the best investment options with high returns in India and should be the go-to investment option for long-term goals.

You can pick funds that invest in India’s biggest companies or funds that invest in every kind of company. The choice is yours.

Want more investment advice for women? Learn how to invest money for better returns with ETMONEY's initiative Making India #WealthyHER.