It’s Time For Women To Play A Larger Role In Money Man­age­ment

Dalal Street Investment Journal - - EXPERT SPEAK - Hemant Rustagi Chief Ex­ec­u­tive Of­fi­cer, Wi­sein­vest Ad­vi­sors

An on­line sur­vey by Fi­delity In­vest­ments showed that women in­vest and gen­er­ate re­turns more than their male coun­ter­parts by 40 ba­sis points. The study brings out the fact that women saved an an­nual av­er­age of 9 per cent of their pay checks, com­pared to an av­er­age of 8.6 per cent saved by their male coun­ter­parts. While men gen­er­ated re­turns of 6 per cent on their fi­nan­cial in­vest­ments, women saw their portfolio grow­ing by 6.4 per cent.

It is ev­i­dent from the re­sults of this sur­vey that women are bet­ter savers and in­vestors. Con­sid­er­ing that ev­ery in­vestor has to be a saver first, women have a nat­u­ral edge here as they are savers by na­ture. Be­sides, women have all the traits re­quired of a good in­vestor for achiev­ing in­vest­ment suc­cess on a con­sis­tent ba­sis like pa­tience, per­se­ver­ance and dis­ci­pline. The key ques­tion, how­ever, is whether the find­ings of the study ap­ply to In­dian women or not.

Al­though a large num­ber of women in our coun­try do not play an ac­tive role in their own and fam­ily’s money man­age­ment, it can­not be de­nied that they pos­sess all those qual­i­ties that can make them suc­cess­ful in­vestors. As we all know, women have been play­ing an im­por­tant role in man­ag­ing the house­hold bud­gets ef­fi­ciently for long time. More of­ten than not, de­spite vary­ing in­come lev­els, they man­age to save money that is of­ten used by the fam­ily to tackle fi­nan­cial emer­gen­cies. There­fore, it is time for them to move beyond their lim­ited role of man­ag­ing house­hold bud­gets and play a big­ger role in money man­age­ment process of their fam­i­lies.

While work­ing women are more likely to par­tic­i­pate ac­tively in the money man­age­ment process, home­mak­ers — ei­ther by choice or by de­sign—usu­ally end up play­ing a lim­ited role. How­ever, the fact re­mains that women are well-suited to man­age money and hence if they de­cide to and are given an op­por­tu­nity to play a larger role in fam­ily’s fi­nances, their con­tri­bu­tion can be im­mense in en­sur­ing that there are suf­fi­cient re­sources avail­able for dif­fer­ent in­vest­ment goals to be achieved over short, medium and long term. Let us an­a­lyze some of the qual­i­ties that make women bet­ter in­vestors and how they can play big­ger role in money man­age­ment:

Abil­ity to plan and ex­e­cute it well - The man­ner in which women han­dle house­hold bud­get and en­sure that no mem­ber of the fam­ily has to com­pro­mise on any of their im­por­tant needs proves that they can plan well and ef­fi­ciently ex­e­cute it too. One of the key fac­tors that plays an im­por­tant role in in­vest­ment suc­cess is how an in­vestor plans his/her in­vest­ments and ex­e­cutes it through de­fined time hori­zon.

Women are cau­tious- One of the classic in­vest­ment mis­takes is the ten­dency to fol­low ag­gres­sive in­vest­ment strate­gies as it of­ten takes in­vestors beyond their risk-tak­ing ca­pac­ity. As a re­sult, they of­ten get dis­ap­point­ing re­sults from their in­vest­ments and that com­pels them to take some hap­haz­ard in­vest­ment de­ci­sions re­lat­ing to their as­set al­lo­ca­tion and choice of in­vest­ment op­tions. Need­less to say, this puts their fi­nan­cial fu­ture at risk. Women are less likely to chase re­turns by tak­ing dis­pro­por­tion­ate risk. While be­ing overly cau­tious too can be neg­a­tive for the health of the portfolio, women can over­come this as they gain more knowl­edge and ex­pe­ri­ence.

Women have more pa­tience- Mar­ketlinked prod­ucts test the pa­tience of in­vestors from time to time. There­fore, only those in­vestors who do not lose their pa­tience due to short term volatil­ity are more likely to achieve their true po­ten­tial. Con­sid­er­ing that women have the abil­ity to think long-term, they are less likely to dump their as­set al­lo­ca­tion and well -de­signed in­vest­ment strate­gies when faced with ad­verse mar­ket sce­nar­ios. This can give won­der­ful re­sults in the long run.

Women could be open to seek ad­viceWhile all those women who have not been ac­tively in­volved in money man­age­ment may not be quite fa­mil­iar with how to deal with the va­garies of the mar­kets and to an­a­lyse the im­pact of ever-chang­ing eco­nomic sce­nario, they are more likely to seek help when needed, as com­pared to their male coun­ter­parts. It is a proven fact that a good ad­vi­sor can make a huge dif­fer­ence to what an in­vestor gets to keep at the end of one’s de­fined time hori­zon.

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