In today’s world, it is imperative for women to be financially secured in the long term along with well-paid jobs. While one can consider many options to wealth creation, one thing to note here is that there are no shortcuts. Investment for women is one of the best ways to achieve a sense of financial security in the long run. Not only is it important for them to start investing as early as possible but also have to be prepared for continuous and monitored investing. The ideal way, however, is to start your investment journey right from the time you start your first job, which is in your early 20’s, that’s a time for new beginnings. So, most people tend to start building their asset portfolios in their 30’s.
In India, there are multiple investment options and plans that can offer long term benefits to women investors. But obviously, you have to be aware of the right channel to put your hard-earned money with a full sense of trust. In this article, we have listed down some of the best investment plans for women in India that can help build a substantial corpus and will be immensely helpful in the golden years.
What are the Best Investment Options Available?
Some of the investment options such as mutual funds or stocks help in creating and increasing liquid cash reserves. Whereas risk-averse investors can go for FDs in a bank, Employee Provident Fund (EPF), and Public Provident Fund (PPF) to save your money for the long-term and draw fixed interest over the years. However, in the case of women investors, an additional factor should be considered as a part of their financial plan. As per the experts, while raising their children, most women tend to take a few years off; so before starting the financial planning, one should make provisions for this period when they are not working.
Top 10 Investment Options for Women
- Fixed deposits (FDs)
Fixed deposit (FDs) comes with a promise of guaranteed returns and are provided by all the banks and NBFCs. In this type of fixed income instruments, one needs to lock in their money in an FD account for a certain tenure and accordingly the interest is earned on it. FDs can be helpful and can be used as an emergency fund as FDs earn reasonable interest. Premature withdrawal is also available with a slight penalty so that they can be broken in the middle of the term, as and when the money is required.
- Recurring Deposit (RD)
RD is a type of investment method that allows investors to invest a fixed sum every month and earn an interest income on the same. All major banks and NBFCs across the country offer the facility of opening an RD account. An investor can choose the tenure as per their choice and will be rewarded the interest accordingly.
- Public provident fund (PPF)
PPF offers an interest rate of 7.1% and comes with a lock-in period of 15 years which automatically makes it a long term investment plan. One can invest a minimum of Rs. 500 to a maximum of Rs. 70,000 annually. You can also start withdrawing the money from the 7th year and enjoy the tax benefits on withdrawals.
Whether you’re a homemaker or a working professional, the PPF facility is open for all. A regular input per annum will not only attract the fixed interest amount but also help you build large savings in a period of 15 years.
- Employee’s Provident Fund:
EPF is one of the best investmentplans for women to avail tax benefits as well as get tax-free savings. In India, an employee registered with EPFO is required to contribute 12% of her basic salary into her EPF account every month as mandatory. The employer also contributes the same amount towards the EPF account of the employee.
The best thing about this plan is the contributions of the employee towards her EPF account is exempt from tax, under the Section 80C of the Income Tax Act 1961, up to INR 1,50,000 annually (but not the employer’s share). The interest of both the employer and employee’s share avail tax benefits. Currently, the interest rate provided by EPF is 8.50%.
Advantages of the EPF – As mentioned, one of the best advantages of this scheme is the tax benefit that one gets by saving a substantial amount of one’s basic pay in the EPF account. Furthermore, the Employee’s Pension Scheme 1995 ensures a life-long pension for retired individuals, as a result of 10 years of contributory membership.
- KisanVikas Patra:
The KisanVikas Patra is one of the systematic investment plans available in India in the form of a certificate at the post offices. It offers an annual interest of 8% and is valid for a period of 8 years and 7 months.
It is considered as one of the best short-term investments in India as the maturity value doubles the principal amount. You can invest your desired amount of money up to individual discretion with no specified limit.
- National Savings Certificate
NSC is considered as one of the most efficient investment schemes for risk-averse investors who wish to get high returns in India. This scheme is available in post offices and offers a lucrative interest rate of 8%. You can invest any amount of money, but the withdrawal is not allowed before the maturity date, except under special circumstances, like the death of the certificate holder or joint holders, court orders, or forfeiture by an authorized Government officer.
- Post-Office Time Deposit Scheme
Considered as one of the most beneficial saving schemes in India, it allows you to decide on the period of investment, which usually ranges from 1 to 5 years.
The interest rate will, however, depend on the chosen time frame, and will be calculated quarterly but payable annually. Women can benefit from this scheme immensely as this scheme is considered eligible for child investment plans in the post office. A single mother can invest a substantial amount of money for child education and healthcare under this scheme.
- Post office Monthly Income Scheme
Also known as the Post-Office Fixed Deposit, this monthly investment scheme is valid for a period of 6 years and as the name suggests, it is available at post offices. One of the features of this investment plan is it attracts a 10% bonus on the principal amount along with the monthly interest. So, you can invest up to Rs. 3,00,000 if you are an individual investor and Rs. 6,00,000 if you invest jointly.
- Mutual Funds and SIPS
A mutual fund is a company that collects money from several investors’ with the same investment objective to make multiple types of investments, known as the portfolio. Examples of the types of investments by mutual funds are stocks, bonds, and money market funds to name a few.
A mutual fund is managed by a professional investment manager called the fund manager who buys and sells securities for the most effective growth of the fund. The person investing in a mutual fund become a “shareholder” of the mutual fund company. In the case the company earns profits, you will earn dividends and on the other hand, when there are losses, your shares will decrease in value.
What is a SIP?
A systematic investment plan is an investment vehicle offered by mutual funds to investors, that allows them to invest small amounts periodically (weekly, monthly or quarterly) instead of lump sums.
Stocks are investments that provide high returns by investing in equities, where the investor is eligible for the dividends declared by the companies and also gets an opportunity to trade in Initial Public Offerings (IPOs). Stocks investment represents part ownership in a corporation and entitles you to part of that corporation’s earnings and assets. One thing to note here is investing in stocks can be a bit risky if you have not done your research properly, as it directly invests in the market. Therefore, it is advisable to research thoroughly and gain an in-depth knowledge of the functions of the stock market before investing.
On a closing note
Irrespective of whatever investment method of you are going with, always remember to conduct due diligence or seek the services of a financial advisor if you can at all afford to do so. If in any case, you choose to decide on your own then the best thing you can do for yourself is to have a truly diverse portfolio.
Author bio: Bryony Jones is a blogger and passionate about content writing. She has been blogging about for more than 7 years now with variety of topics. To read her more pieces on the stuff visit Pop-pins.com