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Business News/ News / India/  This Women’s Day, let’s aim to adopt some of these investment mantras
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This Women’s Day, let’s aim to adopt some of these investment mantras

This International Women’s Day, let’s discuss some investment mantras that women can adopt to unlock their financial potential

Passive investing has started gaining its rightful significance amongst the investor community in India.Premium
Passive investing has started gaining its rightful significance amongst the investor community in India.

The occasion of International Women's Day is a time to celebrate, honour, and accolade the women around us. Whether at home or at the workplace, women have historically demonstrated themselves to be much more efficient at multi-tasking. How often have we witnessed these powerhouses to adopt a much more disciplined approach to various activities that allows them to lead and execute each task effectively.

As more women enter the workforce, they not only become financially independent but also lay the groundwork for future generations' financial security. This phenomenon is not just limited to the urban cities; if one were to venture into the rural heart of India, it is not uncommon to see the women working as well as managing monthly finances. These sharp-witted women are often known to find creative ways of managing money. In today’s time, with rising awareness, the aid of digital platforms, access to financial education, and rising social awareness, it is crucial to understand the financial autonomy and learn investment decision-making skills.

This International Women’s Day, let’s discuss some investment mantras that women can adopt to unlock their financial potential:

Set clear financial goals: Goal setting is an essential aspect of managing personal finances. One must set clear financial goals and prioritize them basis various needs, investment tenures, objectives etc. The goals can further be broken down into long-term goals and short-term goals, enabling one to chart clear pathways to achieve these financial objectives. Additionally, it is imperative for investors to note that one can hardly predict market performance with absolute assurance. Therefore, instead of focusing on timing the market, one needs to start investing as early as possible. The market is known to reward patient long term investors historically

Diversify your investment portfolio: An investors’ exposure to a particular asset is determined by her investment objective, time horizon, and the performance of the sector. While the concept of goal-based investing is not new to India, investors need to look at products that are linked directly to their goals. Therefore, diversification is the key to a successful investment plan. It is crucial to diversify your investments across different asset classes and geographies to minimize risk and optimize returns. Diversification across asset classes can be further complemented with diversification across various styles (Growth, Quality, Value) allowing investors to leverage multiple opportunities in the market

Chase quality: Irrespective of the ultimate financial objective, investors must proactively consider investing in companies that promise ‘Quality’. Quality investing aims to identify opportunities in profitable and cash generating businesses. The increased understanding of an organization’s structure and working can aid in the prediction of its performance in the future. Given the current macro-economic indicators, investors are urged to adhere to the basics of a ‘fundamentals’ driven investing approach that emphasizes on healthy consistent growth, quality of cash flows & RoE with a long term view. A bottom-up strategy that concentrates on the company’s potential will be instrumental from a long term view point for wealth creation

Build an emergency and retirement fund, both: Since emergencies often strike without our knowledge, it is best to be prepared for these events. It is important to invest in an Emergency Fund that will allow an investor access to liquidity in a short time. This emergency fund can help avoid the need to dip into their investments or take loans in times of financial crises. Additionally, creating a retirement fund is an essential step toward achieving financial independence. It is a dedicated savings plan that ensures they have enough money to support themselves during their retirement years

Consider the passive pathway: Passive investing has started gaining its rightful significance amongst the investor community in India. Not only do they offer the opportunity to create a diversified portfolio by replicating the weights and returns of the underlying index but they also ensure lower tracking error and any bias from the fund manager’s end. In India, investors can invest passively through ETFs, Fund of Funds, and Index Funds. No longer are they reflective of a single index, but they have evolved to introduce thematic and sector oriented funds that potentially promise returns to the investors

Keep emotions at bay: With all the news flooding the market, it is easy to get swayed by the surrounding noise and lose sight of the investment objective. If a new trend is gaining momentum of the price of a particular stock is falling, most investors are quick to buy or sell. These behavioural biases (whether cognitive or emotional) could ultimately result in hampering the portfolio in the long run. What investors must understand that prudent investing requires adopting an objective outlook so that investors can prevent themselves from falling prey to irrational decisions

Finally, they say ‘Experience is the best teacher’ and the same principle applies to investments as well. It is significantly important for investors to willingly want to curate their financial journey and understand the various investment avenues. After all, it is your hard earned money that you are hoping appreciates! While it is always advisable to take help of financial advisors before making any investments, taking ownership of your investments is the first step to building your portfolio and taking well-informed decisions.

Raghav Iyengar, Chief Business Officer, Axis AMC

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Published: 06 Mar 2023, 11:17 AM IST
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