Four reasons why women should invest differently from men| Question of Money by Aarati Krishnan| Episode 24

We will be devoting this episode of Question of Money to women and investing. Specifically, I’d like to talk about why women should invest independently from men.  

The first thing I would d like to ask is that the women out there stop letting the men in their life – father, brother, partner – make their money decisions for them. Whenever I talk in investor awareness events, I find that 90 or 95 per cent of the audience is men. A majority of demat and mutual fund accounts in women’s names in India are actually managed by men.  But women need to manage their own money and do it very differently from men for four reasons.    

Different goals and dreams  

Men in your life may not really know pr understand what your dreams or life goals are. Often, you’ll find that women have a very different life-view from men. Whenever we plan a vacation I and my husband discover how different we are. I would love to get away to a plantation bungalow and simply stay there for three days without Wifi, sipping tea. My husband tends to be bored stiff on such vacations.  I have met many young women who would love to travel the world, solo. Young men like nights out at pub with their friends, watching a sporting event. What’s the point in saving and investing if it is not going to fund your personal dreams and goals.   

Independent life decisions  

Having control of your own money is really the key to your independence as a person. As long as someone else controls your money, you will never be able to make your major life decisions independently. Your father may think it is a total waste of money to spend on a trip to Netherlands, though it is your life ambition.  Your money decisions will also influence whether you should work or take a career break. Whether you can afford to pursue higher studies. Whether you should marry or remain single. Whether you should move to a different city because your partner lives there. Whether you should support your parents or siblings in trouble. 

I would urge all the young women out there to take control of your money first. In investing, you learn only through personal successes and failures. You can get experience of personal successes and failures faster if you manage your own money from a young age.   

Different career trajectory 

I’m a career woman and have been working for nearly 30 years now. I’ve observed that women have very different career paths from men.  Most women for one, take two mid-career breaks which men don’t. Many women tend to take a break or relocate in their early twenties because they decided to marry, move to where their partner is or have children. Then they again take a break in their 50s to take care of their elderly parents or in-laws. Even women who remain single do this.  Therefore, working women need to factor in additional emergency funds or special funds to draw from, for their mid-career breaks when they do their financial planning.  

A family safety net  

A fourth reason why women should manage their money independently is that it offers a safety net for the entire family. Often in a relationship, two people will have very different approaches to spending, saving, investing horizon and taking risks. When you merge your money and investments with a partner or family member, you will need to make compromises on all of this. If decisions go wrong, all of you will suffer for it.  

Managing your money separately will make sure that if one person’s decisions on investing or risk-takin go wrong, then the other member’s portfolio is available as a safety net to cushion the family.  

Imagine a double income no kids couple who each have their own emergency fund, liquid investments. They will find it much easier to get through emergencies or support their respective families than a couple who merge their finances. In my case, both I and my husband have been able to contribute substantially to supporting elderly parents because we have absolutely separate portfolios and finances. 

(Host: Aarati Krishnan, Producer & Edits: Anjana PV, Camera: Bijoy Ghosh, Siddharth Mathew Cherian and Renil S Varghese)  

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