Independence Day 2023: How women can attain freedom through financial empowerment

Independence Day 2023: Financial independence is very subjective, but there remains a wide gap between women and men when it comes to investing. One doesn't have to be a financial expert to start investing, but yes basic financial education empowers women to take control of their finances. Mutual funds can enhance this education through various initiatives. In a conversation with Livemint, Aditi Kothari of DSP Mutual Fund explained how women should prioritize safeguarding their financial future by taking control of their funds and seeking genuine financial advice.

How can financial education empower women to take control of their finances?

Financial education is imperative for the common investor to understand the basics of investing. Securities and Exchange Board of India’s (SEBI) investor awareness programmes have helped in enhancing the level of financial awareness and education. Mutual funds are also doing a lot in terms of investor education. The more women learn, the more they grow in confidence. The other part is that one must hire a financial advisor. With better investing knowledge, you would be able to ask the right questions and better understand what your financial advisor is doing and be better equipped to make an informed decision regarding your investments.

What steps can mutual funds take to enhance the financial education of their investors through their investing journey?

SEBI’s mandate to mutual fund houses (MFH) to spend 1% of their revenue on financial and investment education has improved the level of effort put in by the mutual fund houses. Resultantly, India is now doing better than the West in terms of financial and investor education. Today, each MFH has either an expert or a team to manage its financial education initiatives.

Are there any specific investment strategies or options that women should consider?

I don't think there's any specific investment strategy for women that is different from what it is for men. When you are young and enjoying a productive career, ensure that you are investing so that later, when you are married and with kids, you enjoy a passive income. The passive income can complement your salary or if you choose to take a break from working, it can replace the salary. The best way to create a stable passive income is by investing in mutual funds through systematic investment plans (SIP). After investing in a disciplined manner if you have created a reasonably large corpus, you can then transfer it into liquid funds or arbitrage funds through STP (systematic transfer plan). Depending on your preferred frequency, monthly, weekly, etc., those funds invest into a certain mutual fund to maximise your wealth. It is a risk-free way to multiply your investments.

What steps should women take to prioritise safeguarding their financial future?

Firstly, women have to exercise full control over their bank accounts and funds. Often, they hand over control to the men in their lives. Once they have control over their wealth, they need to seek out genuine financial advice. Obtaining term insurance to safeguard her and her immediate dependents’ financial health should become a woman’s primary consideration. However, there is a wrong notion that even if a woman does not have any dependents, she should obtain term insurance. Basically, a woman has to ensure that in the event of her retirement or any untoward circumstances, she and her dependents are fully taken care of. Once she’s done that, she can set out to maximise her wealth through investment in mutual funds.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.