"Financial Planning is important for men but is mandatory for women”

Women today play a much more dynamic role in our society and want to remain independent in many decisions. Needless to say all this also has financial implications and it is therefore critical that their financial environment is aligned in a manner more suitable to themselves.

hi vadana i really like ur above steps but still i feel women mainly in India often don’t really deal with ‘serious’ money matters like investments. I know innumerable women who are like this. They are comfortable paying their bills, shopping for groceries and taking care of their children. When these vital tasks can be so dexterously handled by women then why do they avoid making investments? The reason is simple. There are too many myths that dissuade women from taking a plunge into investing.

 we need to explain them that you should invest in something in order to make money on it. Money can be put into ‘securities’ like bonds, stocks and mutual funds. You can also buy real estate or a house. Basically anything that will fetch you more money is an investment.

My only wish to all women is 'Don’t let anything deter you from making investments now. You have to take charge of your future. Incorporate investments in your day to day life, it will become a habit like exercising and eating right. Investments are good for you!'.

hi i found really good article realtimg to the procedure or how to start financial planning..

Here is a simple six-step plan for financial planning for women.

But before we get on to that, a gentle reminder: For women, as with all individuals, investments form an integral part of financial planning; investments generate returns for the future and take care of your financial needs. This is especially necessary in light of the big question -- 'What if'?

'What if' your husband has not planned your finances well enough? 'What if' there was an eventuality in your family? 'What if' your children's career plans cost you a hefty packet? After all, it's the children who decide on their future, not the parents.

And most importantly, the need for financial independence for today's woman, investments have a role to play therein as well.

Education has also played its part in driving women towards the corporate world. More women are taking to education than before. Armed with a degree, they naturally want to put it to good use by taking up a job. The past few years have seen a steady rise in the number of working women in India.

On the other hand, the Indian marketplace has also evolved and thrown up a whole gamut of new goods and services at the consumer's disposal. This has led to a change in lifestyles for many people. With women taking to work, disposable incomes of households have also increased. And naturally, along with income has come the additional responsibility of investing.

Apart from working women, homemakers too should take to investing. They can save from the monthly allowance they get to run the house. Not only will this enable them to plan better for the family's future but the savings will also prove to be handy on a rainy day. After all, women are considered to be better savers than men!

Like all of us, women also have to deal with an increase in cost of living (inflation). Vegetable prices have been rising consistently. A gas cylinder, which was available for around Rs 70 ten years back, costs almost Rs 300 now.

And of course, there's the issue of rising medical bills as the years roll by. Women hence, need to ensure that they have an investment plan in place to secure themselves against inflation.

These are just some factors that should compel women to think on the need to invest. And of course, drive them towards actually investing money on a regular basis into various investment avenues.

But just what are these investment avenues that we are talking about here? And how do women go about the task of investing their money 'smartly' to yield a desired return on their investments?

This issue of Money Simplified answers all these questions and in the process, empowers today's woman with the necessary advise and guidance to secure her financial future.

6 steps to financial planning

The most arduous of journeys begin with a small step. When it comes to something as important as planning for child's education and marriage, that small step means setting yourself an important objective.

To put it plainly, the fundamentals of investing are no different for women; so you have to plan your investments, execute the investment plan and track it regularly. If this sounds a little complicated, don't worry, we have simplified the process for you.

Step 1: Define your objectives

The most important thing to do while you sit down to plan your finances is ask yourself why you want to invest. For a married woman with kids, the answer could be child's education or child's marriage.

For a woman whose kids are already married, the desire to invest could stem from a dream to set up a small boutique, for instance. For a woman who is yet to get married, it could be for her marriage. So you could have a variety of objectives; when you get down to penning them down you will notice that the list is a lot longer than what you had bargained for.

When we began compiling a list of likely objectives for women we came up with some interesting options:

• Saving for your own marriage 5 years from today.
• Saving for your child's education 15 years from today.
• Saving for your child's marriage 20 years from today.
• Saving for a small business that you want to set up at a later date.
• Saving for an overseas trip, maybe even a pilgrimage 5 years from today.
• Saving for a gift for your spouse or parents.
• Saving for your retirement 30 years from today.

This seemingly long list could be even longer when you take into consideration objectives that are peculiar to you. Some of the more popular investment objectives like saving for child's education and marriage we have discussed in detail in 'Plan for your children's future.'

Once you have the investment objectives in place, the next step is to prepare an investment plan to achieve those objectives.

This may sound daunting, but it isn't, when you consider that it's your investment consultant who has to draw up the investment plan and your role is limited to giving him inputs in terms of your investment objective, appetite for equity-linked investments, investment time frame, tax-efficient returns and the like.

Step 2: Identify the investment consultant

Since your investment consultant has such an important role to play in helping you achieve your investment objectives, it is important that you 'connect' with the right consultant.

If you have been reading the newspapers even cursorily, you would have observed several instances of agents getting their clients to invest in unsuitable investments only to boost their commissions without a thought to the client's investment objective and risk appetite.

In the long run, this could have a ruinous impact on your investment plan. To make your job simpler, we have prepared a checklist to help you select the right investment consultant:

• Both insurance and mutual fund consultants need certification before they begin advising clients. Insurance agents must be certified by the IRDA (Insurance Regulatory and Development Authority), while mutual fund agents must be certified by AMFI (Association Mutual Funds in India). The agent must have the certification on his person, so it's relatively simple to affirm whether your consultant is qualified.
• Does your investment consultant offer a complete investment solution? Or is he the type who only collects the application form, cheque and submits it to mutual fund/life insurance company? Remember you are looking for an investment consultant not a delivery boy. An investment consultant should be competent enough to understand your financial objectives and chalk out an investment plan that can best help you achieve them.
• It is critical that investment consultants are objective and unbiased in their advice. Being objective means placing the client's interest over your own. How do you discern that your agent isn't taking you for a ride? There are ways to find out. For instance, if you are a low-risk investor and your agent recommends a sector-specific mutual fund or an aggressive ULIP (Unit Linked Insurance Plan) then you can be sure that your investment objective is being sacrificed to fill his pockets. The investment consultant should be faithful to the plan that he has prepared for you and his advice must revolve around it.
• Value-add investment services is another area that your consultant must treat as priority. Tools and calculators, stock and mutual fund alerts, portfolio tracker, research on mutual fund schemes and life insurance plans are some of the value-added services that investment consultants provide. Of course, there are few consultants who do this, but those are the ones you must identify. Some of these tools are web-based and should appeal to women who are net-savvy.
• Even after you have taken the insurance policy or invested in a mutual fund scheme, you relationship with the investment consultant continues. You may need feedback on your investment, account statement, premium cheques to be submitted to the life insurance company, follow-up on dividends on your mutual fund investments and the like. It is the responsibility of the mutual fund agent to provide prompt after-sales service and resolve these issues efficiently.

Step 3: Preparing an investment plan

Once you have identified the investment consultant, you must get down to actually implementing the investment plan keeping in mind the investment objectives. For this you need to bare your 'financial' soul and tell him exactly what you want to achieve, the time frame over which you want to achieve the investment objective, the amount of money you want to invest in equities (this is important because equities can give a push to your savings, but also carry higher risk).

If you find this a little too detailed and even unnecessary remember it's important for the consultant to know this so that he can prepare a well-defined investment plan. It's a bit like telling your doctor everything so that he can prescribe the right medicine.

Step 4: Executing the investing plan

After preparing the investment plan, your investment consultant will help you execute it. This involves, for instance, taking the child insurance plan for your child's education/marriage, or the diversified equity fund to build a corpus to buy property after 10 years.

All the investments and insurance options that have been outlined in your investment plan have to be bought. Of course your consultant will help you with it, but it pays to be personally involved up to a level.

For instance, to the extent possible fill the application forms yourself so you learn about the relevant details. While filling the insurance application form, you have to give a true and fair picture of your medical history, accurate information on your weight and height and other details of this nature.

Giving inaccurate information on these points could lead to rejection of claim at a later date. Your investment consultant is unlikely to know these details better than you, so personal involvement is necessary. Likewise, appointing a nominee is common across mutual funds and life insurance, so ensure you have those details correctly filled in.

Step 5: Review the investment plan

Setting the investment plan in action is an important step towards achieving your financial goals. But to ensure you stay the course, a regular review of the investment plan is necessary.

Of course, this will also be done under the guidance of your investment consultant. There could be several reasons why your investment plan may need to be adjusted from time to time.

One instance is when stock markets change course over a period of time, they disturb your asset allocation. So you may have to redeem some of your equity investments or buy more of them depending on how much risk you are willing to take.

As you approach the milestone (child's medical admission or marriage), you need to get out of equity investments since equities are risky in the short term. That money should be invested into short-term debt, which is relatively safe.

Again, all this may sound very complicated, but your investment consultant is the one who will keep his eye on such events and will make necessary adjustments to your investment plan. On your part it helps to be informed since it's your money on the line.

Step 6: Redeem your investments

As the event you have been saving for, is upon you, you need to redeem your investments. With a mutual fund investment this involves signing on the redemption slip and having your consultant submit the same to the mutual fund. In case of a life insurance policy that you have taken, it involves having your consultant submit the policy documents to the life insurer and follow up for the maturity proceeds.

Then you will need to sit down with your consultant and understand the taxation issues involved with the redemption of your investments.

As you can see, setting financial goals, outlining an investment plan, executing it, reviewing it, is not really a difficult task. It may be time consuming but it's certainly not difficult. With a systematic and disciplined approach to investing and by identifying the right investment consultant, financial nirvana could be closer than you think.

You may have seen the latest ICICI Prudential tvc which shows the wife persuading her husband to sign up for the life insurance policy giving her all reasons why he should get one. Yesterday we had a little (healthy) debate on this ad. Without getting into details I’ll just put across the big question which got us thinking:

Is today’s woman playing an important influence in guiding her man’s financial investment decisions? Especially a product as complex as insurance.

We did a quick check around with those present in the room and trust me out of then ten people (including a working woman) they all had the same opinion - the woman is not yet so inclined to her husband’s financial decisions and even a lot of working women depend on their husbands when it comes to making the right investments. Again, this is just the opinion of typical Sec A people sitting in the comfort of their offices. Maybe the market reality is a lot different although we all had our doubts on how true could this picture be.

The reality is still the fact that women r not rally serious in investnebt area, women seem to contribute lesser to financial planning and tend to take a back seat. This seems to be the trend for women at all ages, as since birth to marriage their father manages all their wealth, after marriage the husband, and later on in life, in widowhood if the case were, it tends to be the son who looks after the finances. In each stage, while she is directly affected by the financial decisions taken for her by those around, she is rarely ever in the driver's seat.

 To rectify this, women should start contributing more to financial decisions.

To start this an increase in awareness and ability to learn and judge the environment surrounding her is the key. By the environment I mean... the investment opportunities around and how the financial decisions taken around her affect her. Becoming aware of global happenings and their impact by reading the news, learning how inflation affects us, and increases prices of food, oil, etc that contribute to an overall rise in expenditure. Knowing basic things like this is a good place to start from, and also will give women the confidence to participate in financial decisions of the family, and hence soon give her an equal footing in these matters.

well shefali,,

tell me first you are considering women in particular group or in a whole.See shefali, India is a developing country, and most of the india is found in rural. ok.

 so shefali we left with only 40% (urban), this doesnot mean the whole 40% is making or thinking investment. But out of them, mostly are working, so they can think of making investments, and mostly are doing also. They plans their budgets for their household,and like to put their some money in FDs and in kitties.

But now going to FDs , they like to invest in mutual funds by lumpsum or by SIPs; and in insurance, in their own names or in name of their children.

well such change comes because they are getting familiar with the new products, and want to take better returns.They are getting FDs are very less return(8.5%) as compared to inflation(12%).

thus shefali time is changing now, women are learning, and it takes time. 

well shefali,, tell me first you are considering women in particular group or in a whole.See shefali, India is a developing country, and most of the india is found in rural. ok. so shefali we left with only 40% (urban), this doesnot mean the whole 40% is making or thinking investment.

But out of them, mostly are working, so they can think of making investments, and mostly are doing also. They plans their budgets for their household,and like to put their some money in FDs and in kitties. But now going to FDs , they like to invest in mutual funds by lumpsum or by SIPs; and in insurance, in their own names or in name of their children. well such change comes because they are getting familiar with the new products, and want to take better returns.They are getting FDs are very less return(8.5%) as compared to inflation(12%). thus shefali time is changing now, women are learning, and it takes time.

Regards,

Kamal Gulati 

hey shefali ..i really agree with kamal...though i feel time has changed already and todays women r more particular for investing for their future.

i feel personally that the  approaches that men and women have are pretty similar if not the same, as more often than not they come for financial planning for the same reasons. The planning process also thus remains similar, with the key points of focus being, goals, earnings and expenses, surplus, and using the surplus to best fulfill your goals. However, what does differ are the ingredients, if I may so. Basically, the expenses a women has in a family is usually her contribution to the house expenses from her income. Thus eating into her share of the surplus that she is trying to achieve. When I plan for families I always maintain a sub-plan for the women as well, so that their earnings and surplus can be earmarked and separated. Her earnings should be well accounted for and should ideally be used for her savings, so as to take care of her future needs. This is a fairly recent development in financial planning and I undertake this personally always, as being a working woman I know how it feels. Women today are more valuable and powerful in society, and since I can gain their confidence and learn...
of their needs, I help them safeguard and plan for their future accordingly.
While men and women may have similar goals, their priorities are very different. She always thinks from a security and children's education point of view, so as to say. Men want to increase their wealth and prefer taking bigger risks to create more wealth. On the whole I feel women are more practical with money matters, they are risk averse and look for stable long-term plans.

there r several reasons behind lacking of investment from women...some r..

1. Investing bores you. For some women, the mere words "Wall Street" elicit a big yawn.  Sixty percent of all women say they want to spend as little time as possible managing their investments.

2. Numbers make your eyes glaze over. If you can't get past the basic math, it's very difficult to get yourself to make even the simple decisions, such as how much of your money you want to invest and what percentage of your income it should be. (If I'm talking directly to you, there's a whole chapter in the book devoted to math anxiety.)

3. You don't speak the language. I spent a few years working on Wall Street and I remember initially feeling like I was in a foreign country. The terminology — p/e ratio, basis point, Excel — swam in one ear and out the other, and I would reach for the bottle of Advil long before the day came to an end. A huge number of women — 47 percent — feel that way.

4. You're scared. When you come right down to it, you're afraid if you invest your money, you'll lose your money. That's why so many of you keep your money where it's "safe" in the bank. Losing money is no fun. But even if you've been burned in the past, you have to realize that investing losses are like any other losses. You have to grieve them and move forward. That means determining what you need to do to have a better experience in the future.

You are probably wondering: Why do you have to learn this language, to cross the math hurdles, stomach the boredom and get over your fears? Because if you don't then the only money you will have over your lifetime is money that you earn from working. Moreover, if you don't invest, then your money actually loses value over time. When you do nothing with your money, taxes and inflation devalue your dollars, so they are worth less tomorrow (and the tomorrow after that) then they are today.

Take yourself (and your emotions) out of the rebalancing process. The truth is the vast majority of investors never do it anyway. Thankfully, in the last few years, mutual fund companies have rolled out "life cycle funds" and "target date retirement funds." These ask you what year you're planning to retire. As you approach that date, the fund company shrinks the percentage the fund has in stocks and boosts the percentage it has in bonds to reduce your risk over time. This way, if the stock market tanks a year or so before you're set to retire, you should still be OK.

How OK? Really OK. Consider the following scenario. What if you could find just $10 a day to invest. That's $70 a week. It's the price of dinner for two in a moderate restaurant. The price of one pair of pants at Banana Republic. But when you put that money to work and it earns an average 8 percent annually (if you look back to the Great Depression, the markets have exceeded that by several percentage points), and when you shelter it in an account like an IRA or a 401(k) where you don't have to pay taxes until retirement, it can grow to be a bundle.