Great savers, reluctant investors: Why women face a wealth gap

Here’s a statistic that should make you pause: Women in India retire with nearly 40% less wealth than men. So, for every ₹100 men retire with, women can accumulate only about ₹60. Much of this gap stems from the fact that while many women are disciplined savers, they often struggle to make the transition from saving to investing.

Saving is only the first step, but when it becomes the end goal, inflation quietly erodes the value of that hard-earned money over time. Investing what you save is the only way to stay ahead.

The old stereotype that women are uncomfortable with money continues to linger and often gets internalized over time. The result? The wealth gap only widens. Gender pay disparity doesn’t help either.

Yet women leaders in finance challenge this narrative every single day. As fund managers and investment professionals, they navigate risk, volatility, opportunities, and take high-stakes investment calls to build long-term wealth for their customers.

To understand their journeys and perspectives, we spoke to five women fund managers and investment leaders, asking them five sharp questions: Why did they choose finance as a career? How easy or difficult was it to make their mark in the industry? Has gender ever been a limiting factor? Why do many women lack investing confidence? Who manages money at home? And what is the one financial habit women need to change?

Their answers pointed to a common theme: Women need to move from being excellent savers to confident investors. Making that shift could play a crucial role in closing the 40% wealth gap.

For these leaders, finance was simply a career they were passionate about and excelled in. If anything, the narrative needs to shift, from the idea that women have an uncomfortable relationship with money to recognizing that many are effectively the CFOs of their households, actively managing or participating in family finances. This International Women's Day, read this story by Ann Jacob, who spoke to women investment leaders to explore the confidence and comfort that women can build with money.

To make it lighter, we also invited women from different age groups to submit their financial questions for our band of investment experts to answer.

In the investment space last week, the Securities and Exchange Board of India (Sebi) brought another round of revamp to the mutual fund universe, again aimed at reducing the noise and confusion around how mutual funds are labelled and perceived. First, it discontinued solution-oriented funds such as retirement and children’s fund categories, as they offered little real distinction from other mutual funds apart from their lock-in features.

In their place, Sebi introduced a life cycle fund that gradually changes asset allocation over time. In other words, when you start young, the fund begins with a stronger allocation to equities and gradually shifts towards debt as you age. Not only does it automate asset allocation and periodic rebalancing through a predefined glide path, but it also makes such rebalancing tax-free.

Second, to ensure schemes remain distinct, the markets regulator has implemented portfolio overlap restrictions. For instance, sectoral or thematic funds cannot have more than 50% overlap with other equity schemes other than large-cap schemes. Sebi has given the industry a compliance window of three years. Finally, the regulator also emphasized ‘true-to-label’ naming that lends clarity to investors from a nomenclature standpoint.

“...the scheme name shall be the same as the scheme category,” the circular said. Words that highlight only the return aspect of the scheme shall not be used in the name of the scheme. Jash Kriplani, in his story, takes readers through how life cycle funds will operate and explains the glide-path strategy that rebalances asset allocation with age.

Deepak Shenoy, chief executive of Capitalmind Mutual Fund, in his column, explains why a life cycle fund will not only solve the problem of entry but also exit from a mutual fund, as it gradually moves wealth from the kicker and risk of equities to the calmer stability of debt.

Finally, while welcoming the circular, Dhirender Kumar, founder of Value Research, raises enough alarm bells about the plethora of options and NFOs that mutual fund companies may launch, which could end up defeating the very purpose of Sebi’s framework.

Sebi has also introduced reforms to the alternative investment fund (AIF) framework over the past six months to deepen the market. Unlike mutual funds, which pool investors’ money to invest primarily in listed equities and bonds, AIFs are pooled investment vehicles that can deploy capital beyond traditional securities into assets such as private equity, venture capital, real estate, and hedge funds, making them more suitable for the well-heeled with enough liquidity and risk-taking appetite.

In this story, Anagh Pal walks readers through the changes ranging from co-investment vehicles and accredited-investor (AI)-only schemes to extended fund tenures and lower entry barriers for social funds. While these measures aim to deepen the private capital ecosystem, they also come with a caution: Greater flexibility brings higher complexity, concentration risk, and liquidity trade-offs that investors must evaluate carefully.

And finally, in the spending space, read this important piece by Shipra Singh on the recent spate of credit card devaluations. While periodic devaluations are part and parcel of the credit card business, the scale and frequency have increased lately as product economics are under pressure. For card issuers, an important income stream is the interest earned on revolving credit, which has been shrinking, while the costs of reward benefits continue to rise. Increased consumer awareness and dedicated platforms that arm users with hacks to maximize reward points have only made the situation worse.

Given this reality, it may be wiser to steer clear of the temptation to amass multiple credit cards, pay hefty fees simply to maximize rewards, only to be disappointed later when banks recalibrate the benefits. Ideally, choose cards that align with your natural spending behaviour and switch only when the card no longer serves its purpose.

That's all for the week. Send in your feedback, story ideas, queries at deepti.bhaskaran@livemint.com.