Are MFs a woman’s best friend?

Dhuraivel Gunasekaran | Updated on February 25, 2018 Published on February 25, 2018

AMBRIN AHMED, Manager, Financial firm in Kolkata

File photo   -  marchmeena29

SANTHIYA GAJENDRAPRABU, Home-maker, Namakkal, Tamil Nadu

S SHANMUGA PRIYA, Group II senior government officer, Thanjavur, Tamil Nadu

SIVASANKARI, Home-maker, Tuticorin, Tamil Nadu

SUSHMA GIRISH SARODE Mumbai-based office-goer

ELSS, balanced funds, equity funds, SIPs, et al — today’s women professionals tell us how they go about MF investing

One’s mother is probably the best finance minister in the world, deftly managing her household in an organised manner while keeping the family’s finances in control. But smart mother or no, many women, in the past, took a backseat when it came to investment decisions – handing over that responsibility to the men in their families.

That’s no longer so. Today’s women run their homes — and their finances too. They take decisions regarding money matters on their own, smartly and confidently.

Many women are taking the mutual fund route to achieve their financial goals. Various types of mutual funds investing in different asset classes such as equity, debt, gold, InvITs and international equities cater to a variety of investors with different financial needs, risk taking capacity and time horizons.

Women with high risk appetite and having long-term goals could consider equity oriented funds. Balanced funds and debt funds are suitable for investors with low to medium risk appetite. Liquid funds are alternatives to bank fixed deposits, to park short-term money or emergency funds.

Starting young

Ambrin Ahmed, 27, a single woman working as manager in a financial firm in Kolkata, believes that financial independence gives her the freedom to decide, the power to voice her opinion and a sense of pride in supporting her family. She began investing in mutual funds as soon as she got her first job.

‘’Being a part of the financial market, I believe that among various asset classes, equity mutual funds are the best to create wealth. I have been investing in mutual funds over the last five years, in different schemes through the SIP route,’’ she says.Ambrin has done very well to start investing at an early age. The power of compounding should help her accumulate a large corpus over the long run and secure her financial future.

Fortifying family finances

Some married working women are investing in mutual funds to strengthen their family's finances and help meet goals such as buying a house, and planning for the higher education and wedding of their children.

Mumbai-based office-goer Sushma Girish Sarode, 32, is clear about her financial goals. “My investment in mutual funds should fetch good returns as I am a long-term investor. This will help reduce my husband’s financial burden during preclosure of our housing loan. My primary goal is to accumulate wealth for my daughter’s education,” she says .

Sushma says that her mutual fund investments include equity linked savings schemes (ELSS) that helpreduce her tax burden. The investment in ELSS mutual funds qualifies for tax deduction up to ₹1.5 lakh in a financial year under Section 80C of the Income Tax Act.

Looking before leaping

Santhiya Gajendraprabu, 24, a recently married home-maker residing in Namakkal, is a good example of how young investors are doing their homework while selecting financial products.

Her curiousity piqued by the disclaimer accompanying mutual fund ads, “Mutual fund investments are subject to market risk. Please read the offer document carefully before investing,” Santhiya decided to understand the risks involved in mutual funds before starting her investing journey. She says, “I am now pursuing my AMFI advisor exam.”

Santhiya adds, “I have started systematic investment plans (SIPs) in two funds; one is a large-cap and the other is an equity oriented balanced fund. I have opted for the direct plans in both the schemes.”

Santhiya is right to choose from large-cap and balanced funds and going for SIPs. One, the market, after scaling up sharply, is now volatile. Large-cap and balanced funds offer better cushion. Next, Santhiya, being new to equity investing, is playing it relatively safe. Also, SIPs are a disciplined way of investing in mutual funds, enabling investors to make regular and equal payments (minimum of ₹500) for long periods to accumulate wealth over the long run.

Direct plans bypass the requirement of an intermediary like a distributor, so the commission paid to them is excluded from the expenses charged to investors. Thanks to this saving, direct plans lead to higher returns over the long term compared to regular plans. But direct plans may not be for everyone; they suit only those who understand fund investing and have the capability to pick the right funds on their own.

Retirement planning

Mutual funds also serve as a good retirement planning tool. S Shanmuga Priya, 30, a Group-2 senior government officer living in Thanjavur with her husband and two children, says “I understood the importance of investing once I became financially independent. My long-term goal is to accumulate wealth for retirement as there is no appropriate pension scheme currently for government employees. Over the short term, my goal is to accumulate money to pre-close our home loan.”

Shanmuga Priya has a high risk appetite and invests in a big way in mid- and small-cap funds. She could consider going for less volatile large-cap funds to provide long-term stability to her portfolio.

Sharing knowledge

Sivasankari, 40, a home-maker hailing from the down-south district of Tuticorin, manages a well-diversified portfolio similar to a portfolio manager. Her portfolio comprising stocks and mutual funds includes equity funds, hybrid funds and gold ETFs.

Sivasankari shares her wide knowledge about the market, to educate other women about the importance of investing. She says, “The Indian mentality is to get interest from the principal amount and then transfer the principal to sons or daughters. Many people mainly prefer bank fixed deposits which yield relatively lower returns compared to mutual funds.”

She has invested a certain portion in hybrid funds paying monthly dividend to meet her regular expenses. But she realises that this strategy will not be optimal, going forward, given the 10 per cent dividend distribution tax on equity oriented mutual funds introduced in this Budget.

Sivasankari is thinking long-term and says, “My goal is to accumulate a retirement corpus that will generate a monthly income equivalent to the inflation-adjusted monthly salary my husband currently draws.”

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Published on February 25, 2018
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