Why mutual funds are a great investment option for women

As more and more women join the workforce, mutual fund investments can facilitate easy, convenient, and flexible savings options for them. Mutual funds have opened dynamic and diverse investment avenues and women can make the most of these. The multiple portfolio options and categories make mutual funds a feasible route to financial independence for women across age groups and income brackets.
In fact, data from the Association of Mutual Funds in India showed a 14% increase in the number of women investors between December 2021 and 2022. Though investment in mutual funds have accompanying market risks, a well-rounded approach has the potential to build wealth over time.
Here are some reasons why women stand to benefit if they invest in mutual funds.

• Table of contents:

1. Tips for women before investing
2. A relatively stable way to invest in the market
3. Diverse investment opportunities
4. Choice of investment option
5. Flexibility for changing goals
6. Advantages of investing for women

Tips for women before investing

Here are some factors that women and other investors can consider before investing.

1. Set clear financial goals: Begin by identifying your financial objectives, whether it’s buying a home, funding education, retirement, or another milestone. Clear goals help determine your investment horizon and risk tolerance.

2. Enhance financial knowledge: Understanding different investment options, such as mutual funds, stocks, and bonds, is important. Many resources, including online courses, workshops, and financial publications, can help improve financial literacy.

3. Assess your risk tolerance: Consider how comfortable you are with market fluctuations and potential losses. This will play an important role in determining a suitable investment option.

4. Start investing early: The longer money stays invested, the greater the potential benefit from compounding. Even small, consistent investments can potentially grow significantly over time.

5. Diversify investments: Spreading investments across various asset classes can help mitigate risk and optimise return potential.

6. Consider gender-specific financial challenges: Women may face specific financial challenges. Factoring these into investment planning can help.

7. Take charge of your financial future: Investing is a key step toward financial empowerment. Being proactive in financial decision-making can help achieve long-term security and independence.

A relatively stable way to invest in the market

Putting money in the financial market has the potential to earn reasonable returns, but it also entails certain risks. With mutual funds, however, there are ways to reduce the effect of market fluctuations on your investment. Such funds offer diversified portfolios, so the fate of your investments is not dependent on just a few stocks or shares. Moreover, the portfolio is managed by an investment expert from the asset management company.
This makes stock market investments accessible even to those who are not familiar with market trends or who do not have the time to track the markets. This holds especially true for women juggling multiple personal and professional responsibilities

Diverse investment opportunities

Depending on their investment horizon, risk threshold, financial strategy, and goals, women can choose a mutual fund portfolio that suits their needs. There are multiple mutual fund investment categories based on asset class, duration, risk levels, tax advantages, investment strategies and more. These and various other factors can influence how women invest in mutual funds.
For instance, if you are willing to lock away funds for a long duration and have a relatively higher risk appetite, you can opt for equity funds that invest primarily in stocks and shares. If you have a smaller investment period and want relatively stable or less volatile returns with a relatively lower risk, you can invest in mutual funds that focus on debt instruments such as bonds and other fixed-income securities.
There are also hybrid funds that balance debt and equity, as well as multi-asset funds that allow you to invest in equity, debt, as well as gold, real estate or other asset classes. You can also invest in mutual funds that focus on a particular sector, such as pharmaceuticals, infrastructure, etc.
Those who are well-versed with financial markets or have a relatively high-risk appetite can consider funds that invest in companies that are not as highly rated, or funds that follow a contrarian approach and go against the prevailing market trend.

Choice of investment option

Mutual funds give you the choice of investing either in a lumpsum or through gradual installments through a Systematic Investment Plan or SIP. This can facilitate mutual fund investment for women because whether you’re a full-time professional with a steady stream of income or are working part-time to juggle personal and professional responsibilities, you can set aside as much or as little as you like. Over time, a disciplined savings habit can help accumulate a substantial corpus, especially in a good economy.

Flexibility for changing goals

The diverse investment options can make mutual funds suitable for various investment goals. For instance, you can choose long-duration funds for your child’s education or your retirement. Or you can park your funds for three-to-five years for a near-term goal, such as buying a home or pursuing additional degrees.
There are several other duration options, ranging from a few months to several years, to accommodate changing goals and requirements.

Advantages of investment for women

Investing isn’t just about potential wealth creation, it’s about empowerment.Here are key advantages of investing for women:

1. Financial independence: Investing can help women potentially build financial resources, giving them greater control over their future.

2. Achieving financial goals: From homeownership to retirement planning, investing allows women to potentially accumulate wealth for their aspirations.

3. Beating inflation: Investing can provide returns that outpace inflation, ensuring financial stability despite rising living costs.

4. Securing retirement: As life expectancy rises, women need more financial resources for retirement. Investing can help build a retirement fund for a comfortable future.

5. Strengthening financial decision-making: Investing fosters financial literacy and confidence, enabling women to take charge of their money and make informed choices.

6. Challenging stereotypes: By managing investments, women break traditional norms, inspiring others to take control of their financial future.

Conclusion

Mutual funds are making market-based investments more accessible. The provision of investing in instalments and access to multiple portfolio options can make such investments suited to women across ages and income brackets. You can choose an investment strategy that suits you depending on your expenses, responsibilities, goals, time availability and market knowledge.

FAQs

How can mutual funds benefit women investors?

Mutual funds offer the opportunity to invest in diversified portfolios, helping them achieve financial goals, build wealth over time, and gain confidence in managing their finances.

Are mutual funds suitable for women with limited financial knowledge?

Yes. Mutual funds are managed by investment professionals, allowing women with varying levels of financial expertise to access diversified investments without needing in-depth market knowledge.

Can mutual funds contribute to women's financial independence?

Yes, mutual funds offer a way for women to invest in growth-oriented assets, potentially increasing wealth over time and contributing to greater financial independence.

What factors should women consider when choosing mutual funds?

Women should assess their risk tolerance, investment goals, and time horizon when selecting mutual funds. Factors like SIPs, diversification, and fund manager’s expertise are also essential to consider.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.