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Women's Weekly: Investmentsutra

Jul 22, 2009

A female pop star once said, "With love, you should go ahead and take the risk of getting hurt... because, love is an amazing feeling." So are we really risk takers? Especially where our hard earned money is concerned? Not really, if research is to be believed. As Gloria Steinem, renowned feminist once famously remarked, women were not gamblers because, "women's total instinct for gambling is satisfied by marriage." So, while love takes care of our risk appetite, marriage takes care of the instinct for gambling.

The truth is we are conservative where money is concerned. The bigger truth is that we don't really have the money to spare for something which has no assured returns (shopping is an exception to this rule). And most importantly, we believe in the greater good of society! We believe in contributing to the liquidity in the market by essentially circulating the money within the economy. Therefore - WE SHOP!! Shopping is an assured way of keeping the money flow continuous. Wouldn't you agree?

While buying is our birth right, bargaining is our basic human right! We are gifted. We can multitask. We can shop and save at the same time. Most of us are sure that the concept of 'Sale' was coined by some worldly wise woman like us.

So, we are good at handling money too. Yes! That's true. We will shop, we will spend, yet, we will also save. Hail the age of the Superwoman!

Investing?? Well, the request is still being processed. We save right? Isn't that enough?

Investment strategies for women

Research has shown that women in general find it stressful and time consuming to invest. They have an inherent fear about investing, and hence a knee-jerk reaction to this fear is to avoid investing completely.

We would rather save the old fashioned way than invest. We would rather have gold than stocks. Or government bonds rather than stocks.

Yet, with the way the inflation is rising, the old fashioned way of savings would give old fashioned results. We will still be able to buy products but not our beloved brands; we will still be able to buy bags and shoes but definitely not a Jimmy Choo or a Fendi.

So, even if it's the stars that we want, (or diamonds with a dash of Jimmy Choo here and a Gucci there), then we better sit up and re-examine our inherent investment make-up. After all, a penny saved is a penny gained while a penny invested is an income gained.

You say: "We are conservative."

Our suggestion: Play it to your advantage.

The fact that we are conservative and cautious by nature is actually our strength. We don't get swayed by quick rich schemes and tend to evaluate an investment opportunity thoroughly before taking the plunge. So, the chances of us losing money in an investment are minuscule.

An interesting fact supports our claim: Catalyst, a research organization, studied Fortune 500 companies and found that companies with more women at the top delivered a 34% higher return than companies with fewer women. So all those out there who think that women are financially challenged, be warned!

You say: "We lose track of our income and expenditure."

Our suggestion: Keep them separate.

We have an intuitive approach towards seeking solutions - we spend! So whether sad, happy or plain bored, our hand instinctively reaches to our purse. Hence it is essential to keep separate the amount to be saved and spent.

We suggest having two different accounts. It helps. Otherwise, we tend to dip into the same pool and spend more. We also lose track of how much we spend and save on a daily, weekly or even monthly record.

You say: "We stick to routine better."

Our suggestion: Have a fixed ratio of investing to spending.

It is generally seen that women stick to routine when it comes to investing. We usually save and/or invest a fixed sum month after month. We don't really evaluate our investments at regular intervals.

As compared to men, fewer women end up changing the amounts invested during the previous year(s) or plan to change their asset allocation in near future. Irrespective of the market scenario, women always end up following a fixed investment routine.

It has been observed that women start saving late in life. (Sorry friends, but bags and shoes DO NOT classify as investment and savings!) Usually we decide to save/ invest when we think there is a responsibility upon us - it can be in form of children's education or helping parents etc. That's when we usually develop and stick to an investment routine - say investing in mutual funds every six months or buying Postal certificates every month or contributing to a chit fund regularly.

So have a 50-50 ratio. Save half of your income; spend half of it. Over time, you will have a sizeable sum invested, which will bring you favourable returns.

You say: "We want Mr. Right."

Our suggestion: Settle only for 'The One'.

Many women still prefer the help of advisers - be it our consultant, husband or a friend. We want our financial advisor to have all the qualities of a 'Mr. Right'. He should be smart, sensitive to our needs and irrespective of what the whole world (or in this case, the market) says, he should be able to take decisions on his own and prove them right. Most importantly, even though we may be independent women, he should be 'dependable' and make us feel secure.

As Mills and Boons preaches in all their books 'Finding the Right One is Important!' The one tuned in to the needs of women.

You say: "A charming woman doesn't follow the crowd. She is herself."

Our suggestion: Take decisions in tandem with your personality.

"A charming woman doesn't follow the crowd. She is herself", said Loretta Young. Uniformity has never worked for us. Some of us would prefer the old world charm of dependable, stable stocks with assured returns, in which case it's large cap companies / blue-chip stocks that we should think of. While, some of us, would settle for an adrenaline rush of a whirlwind affair with mid and small size stocks, hoping we strike gold with one of them.

Meanwhile, a blend of moderate risk and high promise would excite a few of us. Based on your capacity and the urge to take risks, allot some specific percentage of your income to blue-chips, fixed deposits or small and mid cap stocks. At the end of the day, we just have to be ourselves and the decisions to make will end up being a lot clearer.

Start by upping your finance quotient by understanding the nitty-gritty of stocks in a simple and easy to read manner, as suggested in The 5 Minute WrapUp (a free resource).

Over the next few months we plan to cover a range of issues that are important to women interested in investing, and offer solutions for the same. If there is anything in particular that you would like us to cover, write in to us!

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