Investing for women

As a woman who has always made the effort to do personal financial planning myself, there are some lessons that I have learnt over 22 years. 

This is the gist of those lessons. 

If you are a woman who has just started earning: 

The first thing you should get is a personal vehicle. Preferably, a car. If not that, a two-wheeler. 

But a car that is about 20-30% more expensive than what you can afford right now. 

This is because the car has to stay with you for 10-12 years. In a couple of years, your salary will go up and you will wish you had a bigger car. Also, car loan can be paid off quickly - about 2-3 years. 

As your salary grows your savings will automatically rise. Ensure that you keep some liquid cash in FDs etc. that can be easily reached in case of an emergency. 

Be absolutely ruthless about cashflow management. If you need 50,000 rs for your monthly expenses, keep 55,000 in the bank and put the rest in a small 25-day FD if you don't want to commit to a longer period or illiquid investment. 

To the extent possible, use your credit card. This gives you points that can be used for stuff, 45-day free credit period during which you earn interest on your money in the savings bank. 

Once you have 6 months' expenses worth in the bank in liquid investments like FD or Cash fund, start investing. 

The next asset class you should look at is gold and real estate (a house to live in). Unlike men, for women, a house to live in is a HUGE security net. In the worst-case scenario - you get married, you give up your job to look after the house/kids, and then things don't work out. If you have a house to call your own and 6 months of liquid money in the bank, you will be a LOT more confident of your decisions either way. They will be decisions of choice, not decisions of compulsion. This worst-case scenario NEVER plays out for men. Only for women. 

Let us assume real inflation is 8-10%. So, good investments would be ones that rise more than 8% per year, and poor investments would be those that rise less than 8% per year. This puts FD in the poor investment category. Houses and gold are both assets that rise much faster than inflation and general hikes. This means that every year, that 100 gm bar of gold or that 2000 sft flat becomes LESS affordable to you, even if your money in bank is increasing. That asset is becoming expensive at a higher rate. That's all. 

Personally, I bought gold and real estate first (within first 7 years of my first job) and then did stuff like stocks, mutual funds, etc. I still buy gold at every dip. Silver is also meant to be a great asset class, but I dont know enough. 

Understand how your asset classes work and then delve. If you work with an investment advisor also, understand what they are getting into. We have had cases of advisors offering us 20% returns, only to find that they were offering trading expertise with a long term insurance plan also to be bought. They would not offer trading expertise without buying the useless insurance plan with a 10 year premium paying term.  

Majority of investors in FnO and day trading make losses. So, it is very useful to do a dummy portfolio first before putting any real money. 

And most important is this: 

There are many parties in the world. You are not invited to all of them. And that's ok.