FDs, SIPs, crypto, or gold? What’s best investment option for women
- According to Anjali Nair, COO of Season Two Senior Living, new-age women need to demonstrate the same poise and assertiveness when it comes to making investment decisions as they do with career choices, to ensure financial independence throughout their career and post-retirement.
The right choice of investment can lead up to value returns on your hard-earned money. However, what is the best option for investment always is a confusing factor and needs great analysis. To invest, you need to finalise your capital, build an investment strategy, pick a scheme to park your money and set a financial goal. But for women, managing investments in risky schemes alongside work and family can be hectic.
Usually, cases are that most women chose traditional schemes which offer guaranteed returns and eliminate the risk and need for constant attention. While old generation schemes are good sorts of investments, however, there are diverse mediums available for them to grab an opportunity over. Financial markets which are usually considered male-driven, are now being steadily adopted by women. There is a vast pool of investment options right from equities, and SIPs to ETFs and even good-old FDs for women to invest in. However, certain factors need to be taken care of while investing.
According to Anjali Nair, COO of Season Two Senior Living, new-age women need to demonstrate the same poise and assertiveness when it comes to making investment decisions as they do with career choices, to ensure financial independence throughout their career and post-retirement. It is advisable not to pay heed to random advice floating around as every woman has different investment objectives and time horizons, financial goals, and risk profiles. Having said that, prudent planning and a disciplined approach will help women achieve financial independence for life.
In Nair's opinion, the thumb rule is to have a balanced outlook toward investment by spreading the portfolio across equities and debt.
"Investing in systematic investment plans (SIPs) can be an effective risk-mitigating approach. Public provident fund (PPF) and fixed deposits (FD) are good options to attain financial stability with a long-term view," Nair added.
Some of the banks' FD rates are
For FDs below ₹2 crore, RBL Bank offers the highest 7% rate to the general category and a 7.5% rate to senior citizens on 15 months tenure. SBI's highest rate is on 5 years and up to 10 years tenure, at 5.65% for the general category and 6.45% for senior citizens. ICICI Bank and HDFC Bank's highest rate is on 3 years 1 day to 5 years tenure at 6.10% for general citizens and 6.60% to senior citizens.
Axis Bank's rate is highest at 5.75% to the general category on 1 year 11 days < 1 year 25 days and 5 years to 10 years tenure, while it offers a 6.50% rate to senior citizens on tenures starting 1 year to 10 years.
IndusInd Bank's highest rate is 7.50% for senior citizens 1 Year 6 Months below 61 months, while the rate is 6.75% for the general category on these tenures.
PPF account
Public Provident Fund Account (PPF ) is a government-backed small saving scheme with a minimum investment of ₹500 to a maximum of ₹1.50 lakh in a financial year. PPF offers an interest rate of 7.1%. Interest earned in this scheme is tax-free under Income Tax Act. The tenure here is 15 years.
Both FDs and PPF accounts have the tax exemption benefit of ₹1.5 lakh under section 80C of the IT Act.
Aditya Damani, Founder of Credit Fair advises refraining from investing in volatile asset classes like cryptocurrencies. Instead, SIPs can help in developing a balanced portfolio.
Damani said, "Women, homemakers or working professionals, need to take control of their finances and take a personal interest in investing and financial management without relying on the male members of the households. Women’s active participation in financial matters ensures their financial wellbeing and the well-being of their respective families."
He added, "for those women who have begun their investment journey, it’s important to make informed decisions. Given their measured approach in risk-taking, a diversified portfolio of equities and debt should be the way forward. They should refrain from investing in volatile asset classes like cryptocurrency. Instead, they should invest in systematic investment plans (SIPs) to develop a balanced portfolio."
In August this year, investments in the Systematic Investment Plan (SIP) stood at ₹12,693 crore compared to ₹12,139 crore in the previous month.
Investing in cryptocurrencies is risker than equities due to its lack of clarity in management and growth prospects, coupled with a highly sentimental-driven nature. Cryptocurrencies are still not accepted by major economies. Trading is complex and their exposure to cyber threats is high. On CoinMarketCap, there are 21,103 cryptocurrencies and 509 exchanges. Earlier, the crypto market cap was near the $1 trillion mark, however, has been broadly volatile on many occasions this year. In the current year, some of the famous shocks the crypto world faced are -- Terra tokens crash that wiped reportedly $60 billion of investors' wealth, a liquidity crunch, and the collapse of hedge funds Three Arrow Capitals among others.
Also, Damani believes growth-focused young women professionals can allocate a share of their investment portfolio to equity based on their risk appetite. Alternatively, to offer capital protection to the investment portfolio, one can invest in debt mutual funds, debentures, or bonds launched by NBFCs or in peer-to-peer (P2P) lending platforms like Credit Fair Capital. He also suggested for women in the older age bracket looking to earn monthly interest on principal to offset their day-to-today expenses, going for debt instruments, high-yielding dividend stocks or bonds are some available options.
Dr VK Vijayakumar, Cheif Investment Strategist at Geojit Financial Services pointed out that women mostly invest either in bank deposits or buy gold and miss out eventually on the best asset class.
Geojit's chief strategist said, women are generally good savers, but not so good at investing. This is because most women do not have high financial literacy, particularly knowledge of the risk-return profile of various asset classes. Consequently, most of them invest either in bank deposits or buy gold.
Thereby, in Vijaykumar's view, they miss out on the best asset class namely equity. The situation is slowly changing with more women opening Demat/mutual fund accounts. Women have greater patience than men. Therefore, mutual fund SIPs are an ideal option for them. Investment in gold can be done through gold ETFs/ sovereign gold bonds.
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First Published:19 Sep 2022, 11:55 PM IST
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