Big Story: The right investment choices for women

Anand Kalyanaraman

When it comes to money matters, women in India generally have it tougher than men. Social conditioning and patriarchal attitudes mean that many women don’t have or don’t exercise true financial freedom and agency – the men in their lives (father, brother, husband, son) usually call the shots on their money matters. Money management, women are often led to believe, is best left to men. This false notion is, in many cases, entrenched by a woman’s lack of financial knowledge and confidence. Add to this other disruptors such as gender pay gap, and career breaks to raise children or take care of elders – and women often find themselves on the financial back-foot.

This must change, and women need to take charge of their financial life. For many good reasons. One, it’s your money, after all. Two, women tend to live longer than men, and must provide for the extra years. Three, in many aspects, women may be better suited than men to manage money – with an innate savings habit, long-term approach to provide for multiple future goals, and the ability to juggle many hats. The many successful women money managers in India’s financial markets today show that investing need not be the prerogative of men.

Here are some pointers that can help you take charge of your money matters.

Learn more, earn more

Don’t get stuck for want of financial knowledge. Get financially literate - there are several good resources available today to get you up to speed with the basics (and also complexities) of money and investing. From online portals such as Investopedia and web-based courses to a host of informative articles in the financial media, there is much scope to learn more and use it to good effect in your journey towards financial decision-making and freedom. Make good use of these.

When you take up a job, do your research about the sector’s pay levels and negotiate well to get your worth, based on your education and experience. Also, don’t shy away from asking for appropriate pay hikes. When you earn well, you can save more and invest more.

Invest what you save

Saving money is important, but it is more important to invest for wealth creation in the long-run. Decide on your asset allocation – the mix between asset classes such as equity, debt, and gold - based on your goals, risk appetite, return expectation, and time horizon.

Choose optimal instruments. For instance, for equity exposure, it is a good idea to invest in well-run mutual funds through the systematic investment plan (SIP) route. Post-office small savings schemes, bank fixed deposits and debt mutual funds can be used for debt exposure. If you have a girl child, the Sukanya Samriddhi Yojana is a safe, tax-efficient, debt option to invest for her higher education and wedding expenses. If you seek to invest a portion of your savings in gold, sovereign gold bonds is the best bet (See article).

Cover yourself

Provide for the rainy day. Have a contingency fund (6 to 8 months of expenses) in safe bank fixed deposits, meant to be used only in emergencies. This is important, given that women invariably shoulder the burden of running the family show, come rain or shine. Also, take adequate life insurance cover (if you have dependents). Besides, take suitable health insurance cover (See article). Cover your family’s health as well.

Plan your career breaks well

Many women take career breaks – of varying lengths - for maternity or for other family purposes. Make the most before and during these career breaks. One, save and invest diligently during your working years. This is important, because during the break, even compulsory investments such as contribution to the Employees Provident Fund (EPF) will not continue. Next, during the break, use your accumulated investments with care and after due thought. Ideally, these should be continued into the long-term. But in case, you have to use these investments, make sure the purpose is worthwhile – don’t give in to unreasonable pressures and fritter the money away.

Don’t lose out on paid leave and other benefits given by the employer during the breaks. Get a clear understanding about the opportunities that will be available to you when you join back. When you are on a career break, keep learning and stay updated to the extent possible; this should help you bounce back quickly when you want to and without sacrifice on the pay front.

Ideally, depending on your circumstances, you should try to get back to work – this will go a long way in your journey towards financial independence.

Rightful share

It should not be the case that you incur the household expenses while your spouse does the investments in his name. Remember, if the marriage does not sustain in the future, while you may be entitled to alimony and child care expenses, you will have a legal right to investments built during the period of the marriage, only if you are also an owner of such investmentsSo, ideally, have an arrangement where there is sharing of both household expenses and contribution to investments. Don’t shy away from asking for your rightful share in such investments.

With changes in the law, daughters also have inheritance rights in ancestral property. Make sure you get your due. Know about and keep investment documents handy. Have nominations for your assets. Also, it is always a good idea to write out a Will to bequeath your assets as you wish to, after your time. Don’t sign documents blindly, always know what you are getting into. Help if need be, but don’t let your innate kindness and generosity compromise your financial position and future.

Whether you are a working woman or a homemaker, take an active interest in financial matters and be aware of what’s going on. Keep track of your money, and take charge of your investments. Don’t hesitate to stand up for your rights. No, this doesn’t make you money-minded and a trouble-maker; on the contrary, it helps keep the peace in the family and provides it financial security in the long-run.

You owe yourself a health cover

Rajalakshmi Nirmal

my: Health Women Suraksha from HDFC ERGO covers all major illnesses specific to women

You are important. To play many different roles at home and office at the same time and to continue to rock the world, you should take care of your health.

While one can’t be sure of being in the pink of health all the time, you can be worry-free if you have an insurance policy that can pay for expenses on medical treatment in case of an illness. We sifted through all policies and found the best for women to cover their health risks - my: health Women Suraksha, a defined benefit critical illness plan from HDFC Ergo that is specially designed for women.

Critical illness policies are different from regular health insurance covers called medi-claim plans or hospitalisation plans as, at the first instance of the insured acquiring any of the listed illnesses under the policy, the sum insured (SI) is paid as a lumpsum irrespective of the cost of the treatment. Medi-claim policies, on the other hand, reimburse only to the extent of the hospital bill.

That said, every woman needs to have a basic hospitalisation plan too (may be Royal Sundaram’s Lifeline or HDFC ERGO Health’s Optima Restore) which may comein handy during instances of hospitalisation, say due to a viral fever/infection or any other illness which is not very serious and outside the purview of the CI cover.

What it covers

Now, you may ask why not any regular CI plan in the market and only HDFC Ergo’s my:health Women Suraksha?

The regular CI plans in the market today cover only 10-20 critical illnesses and exclude the common illnesses in women such as osteoporosis. Also, many of the regular CI plans don’t pay for expenses in the pre-cancerous stage (carcinoma in situ). In HDFC Ergo’s my:health Women Suraksha, there is an option to get a comprehensive cover for many illnesses, including the ones common among women, through six different plans. You can opt for cover for cardiac ailments alone, or only for cancer or both, or take a comprehensive critical illness cover that will pay for 41 chronic illnesses, including kidney failure requiring regular dialysis, end-stage liver failure, Parkinson’s and Alzheimer’s along with cancer and heart ailments.

There is also a plan that covers expenses on treatment for bodily injury arising from assault and burns. Under the Cancer Plan, expenses on treatment of cancer in the breast, cervix, uterus, fallopian tube, ovary, and vagina, among others, are covered. Under the Cardiac Plan, open chest CABG, heart valve repair, first heart attack of specified severity, and coma of specified severity are among a long list of health conditions that are covered.

The policy also offers add-on covers that include protection for pregnancy complications, complication in new-born baby (that includes Down’s syndrome and surgical separation of conjoined twins), and loss of job due to voluntary resignation or termination from employment due to the diagnosis of any of the major illnesses or procedures.

Women aged 18-65 years are eligible for this policy, and it can be renewed lifelong. The policy is offered to women with multiple sum insured options, ranging from ₹1 lakh up to ₹1 crore.

Distinctive features

HDFC Ergo’s my:health Women Suraksha has many firsts to its credit. It is the first comprehensive women health policy that also provides for cover assault and burn injury. Also, this is the only policy that lets all women in the family (mother/mother-in-law, daughter/daughter-in-law and sister/sister-in-law who are dependents) to be covered under one plan. Also, unlike most CI plans that have a 30-day survival clause for CI claims to be settled, in this plan, the survival period is seven days. Also, if a claim is made for any minor ailment, a 50 per cent discount in the premium is given for the next five years.

In the market today, the two insurers who offer specialised policies for women are Tata AIG and Bajaj Allianz. But Tata AIG’s Wellsurance Woman and Bajaj Allianz’s Women-Specific Critical Illness do not cover as many illnesses/conditions as HDFC ERGO’s product does. The premium of my:health Women Suraksha is also affordable. The premium for a 40-year woman for an SI of ₹20 lakh for comprehensive CI cover — is ₹20,390 inclusive of GST. When taking this policy, make sure to take a cover (sum insured) for at least ₹20/30 lakhs so that the money will suffice the cost of treatment, plus help you face a liquidity crunch for one/two years if you want to take a temporary break from work.

In love with gold? Buy gold bonds/ETF

Rajalakshmi Nirmal

Do not trust gold saving schemes of jewellers; better invest in paper forms of gold through MFs or RBI

Women have been having a love affair with gold since aeons. But gorgeous ladies, you have a sheen on your skin already because of your beautiful inner-self, so, why cling on to the gold ornaments and buy more of them every year?

When you buy gold ornaments, you pay extra for each gram in the form of making charges and when you exchange you lose value through wastage charges.

That said, the yellow metal is definitely worth a buy as an investment, as its value tends to appreciate. Increasing geo-political tensions and trade uncertainties make the metal a good long-term investment and a portfolio diversifier. So, why don’t you by some gold in non-physical form, as bonds or ETF?

Here, we discuss the merits of investing in gold in paper form and also explain why gold saving schemes of jewellers is not a safe option.

Jewellers’ Gold saving Schemes – a strict no, no

Jewellers run a scheme wherein customers can deposit a fixed amount every month for a tenure. At the end, the customer can buy gold jewellery for the value of the saving plus a bonus amount. Some jewellers give the last month instalment as cash incentive and offer to give new jewellery at a lower making charge.

However, what public fail to notice is that it comes with a lot of ‘ifs and buts’. The discount or waiver on making charges is only for the value of gold you can buy with amount you have saved; if you buy gold for more weight, you will have to cough up all the usual charges. Also, note there is no way you will be allowed to redeem your savings in cash or in the form of gold coins/bars it is only in the form of gold jewellery. More importantly, these schemes are unregulated. Most jewellers are registered as sole propreitors or partnership firms and operate in a regulatory vacuum. If the jeweller runs away with customers’ money, there is no other way, but to take your case to the court. Exactly two years ago , Nathella Sampath Jewellery, a big gold retailer in Chennai for over 70 years, shut shop and cheated customers who had put money in the savings scheme. More recently, there was also news of promoters of Goodwin Jewellers, a Maharashtra-based jewellery chain, running off with investor money. Note that in insolvency proceedings when assets get liquidated, unsecured creditors (that includes the customers of gold jewellery savings schemes) are the last to be paid.

From time to time, cases keep coming up on fraud by jewellers. In February 2019, the government, to crack down on scamsters, passed the Banning of Unregulated Deposit Schemes Ordinance, which made saving schemes run by many jewellers illegal, except those who had specific regulatory approval. But jewellers escaped through a loop hole in the Ordinance which allowed jewellers to continue with it if it is in their normal course of business and the amount collected was in the nature of business advance.

It is thus suggested that you be smart and start to save gold in paper form.

Sovereign Gold Bond

For those of you who are eyeing returns on investment in gold, sovereign gold bonds are the best option today. These are issued by the Reserve Bank on behalf of the Government of India. Investors in the bond need not fret over safekeeping it as it is in demat form.

Everyone except NRIs can invest.The bonds are issued in denominations of one gram of gold and in multiples thereof. Maximum investment in a year is capped at 4 kg for individuals, 4 kg for Hindu Undivided Family and 20 kg for trusts.

When RBI opens the bond issue, it also announces the price at which it will be selling the bond. The price is fixed by taking simple average of closing price of gold of 999 purity on the last 3 days of the week preceding the subscription period. You can buy these bonds from banks, the Stock Holding Corporation of India, designated post offices and the National Stock Exchange of India and the BSE during the primary issue and later in the secondary market (through NSE/BSE).

The investment tenure of the sovereign gold bonds is eight years. At the end of eight years, you will receive an intimation from RBI about redemption. The redemption price shall be fixed in Indian Rupees and it shall be based on simple average of closing price of gold of 999 purity of the previous 3 working days.

Note that premature exit is allowed from the end of the fifth year. As these bonds get listed in the secondary market within a fortnight of close of the issue, investors who want to exit early, can sell the bond in the secondary market (capital gains will be taxed; only when held till maturity tax exemption is given). There is an interest at 2.5 per cent per annum on the face value of the bond that the investor gets.

Gold ETFs

Gold exchange-traded funds (ETFs) are another way to investing in gold. These are units of mutual fund schemes. You can buy/sell these units through a share broker provided you have demat and trading account. These ETFs track the domestic price of gold. However, depending on the demand/supply of these units in the market, they can trade at discount/premium to the market price or NAV of the fund. Do also note that though the cost of investment in gold ETFs is cheaper than cost of investing in gold in physical form, you will need to pay for fund management charge of the AMC and service charge of the broker. If you are opening a demat account specifically for investing in the gold ETFs, then demat account charges will also have to be accounted in your total costs. You also need to be also aware that some of these funds have high tracking error because of their cash holdings.

COMMENT NOW