Ladies take control of your finances

In today’s world, women take charge of key decisions, whether it is at home or at work. So why not your finances? To meet the financial goal, all you need to do is plan, execute and track your investments regularly. If this sounds a little complicated, don’t worry, we have simplified the process for you.

Let us take examples of women from four different age and income groups so that it makes defining their goals and requirements simple. Except for Case I, all have a common objective of a financially sound retired life.


Case I:

Women under this category do not have any particular investment objective in the near future as they are young with no responsibilities.

If you fall in this category, make sure that you take an adequate medical cover equivalent to your annual package. It will help you in the long run to cover expenses like maternity, medical emergencies for yourself and family members.

“One should opt for a cover at an early age and keep on increasing the sum insured level at regular intervals to hedge against medical inflation,” said Shobana Kamineni, wholetime director, Apollo Munich Health Insurance.

“For individual policies, along with the sub-limit, also look for the waiting period applicable for claiming maternity expenses as well as any specific exclusions related to the cover,” said Sanjay Datta, head- customer service- health & motor, ICICI Lombard GIC.

If you have dependents (parents), taking insurance for them is essential.

In case, parents are partly or wholly dependent on your income, take life cover so that in dire circumstances like death, the insurance company will pay a stipulated amount to the dependents at regular intervals or in lump sums.

“Individuals who are financially independent with no liabilities, a cover at least 10 times of their annual income could be adequate.” Apnapaisa.com CEO Harsh Roongta said.
Maintaining a contingency fund in cash or savings account which will last for 4-6 months is a wise decision for all.

Start investing regularly via SIP (systematic investment plan) keeping a long-term horizon as your money will be managed professionally at lower cost generating comparatively decent returns.

You can invest in fixed deposits, liquid mutual funds, MIP (monthly income plan) and savings account. Investing in gold via ETF (exchange-traded funds) is wiser as it is the cheapest form to invest in gold, with low-storage costs.

Case II

At this age, a concrete plan is needed to achieve financial goals like children’s education, marriage and retirement plan. Here, goals are lined up after every five years starting from 2015. The plan recommended is 70:25:5 in equity, debt and gold.

For instance, if the down payment is say Rs10 lakh, then 60% of Rs10 lakh is recommended in equity and the rest in debt.

Balance your plan with a combination of low and high risk investment. Hence, SIP in equity mutual fund is recommended for wealth creation.

To achieve long-term goals of 5-15 years, invest in safer asset classes. You can put aside money in FDs, [national savings certificate (NSC) that gives 8% interest for a 6 year lock-in period, kisan vikas patra (KVP) gives 8.4% with 8 years and 7 months lock-in, public provident fund (PPF) gives 8% for 15-16 years lock-in] for your child’s education and marriage as they give fixed returns.

The couple should make sure to have adequate life cover till their retirement as children and grandparents are their dependents.

Along with life cover, get adequate health cover for yourself and the entire family.

“Even if she and her family members are covered under group mediclaim, still she should take an individual mediclaim cover,” Apna Paisa chief editor Bienu Vaghela said.

Case III

Since you do not have regular cash flow, all you can save is from your husband’s income. An allocation of 60:30:10 in equity, debt and gold is recommended.

Be invested in a combination of long-term instruments like equity mutual fund schemes, PPF, KVP, NSC and gold.

“Homemakers may like to demand higher bonuses from their counterparts. I suggest at least 40-50% of this can be allocated to SIP of equity mutual funds, the percentage allocated may lower as one grows older,” said Swati Kulkarni, VP & Fund Manager, UTI MF.

Invest in gold via ETF, MF or e-gold which will help you create wealth over a long term and get safe returns. As most of the financial commitment is taken up by your husband, make sure that he takes adequate life cover and mediclaim for the entire family.

The insurance cover should be at least 10 to 12 times of his annual income so that in the absence of him, you have adequate amount to take care of all family responsibility. You can buy a term policy online as it is cheaper. A health insurance cover of at least Rs3 lakh individually for entire family is recommended.

Case IV

You can go for a world tour in the near future and lead a financially sound retired life if you route the investments through a proper channel. For example, instead of keepingthe FD amount in the savings account, make another FD for 2-3 years for better returns.

You can also put you money in senior citizen savings scheme, where they get 9% for a 5 year lock-in period. At this age, capital preservation along with regular cash inflow is required.

The retired couple should first park corpus in post office -monthly income scheme (max Rs9 lakh is available), senior citizen scheme (max Rs15 lakh is available).

At the same time, they should have adequate mediclaim cover for emergency or else your retirement corpus will be utilised towards medical bills.

“A medical insurance of minimum Rs5 lakh is a must,” Suresh Sadagopan, who runs Ladder 7 Financial Advisory Services, said.

The pre-existing diseases will not be covered from day one, hence take this cover a few years before retirement so that it can take care of retirement easily.

Also, if an employee is covered under a group insurance by his company and the cover is not adequate, buy an independent cover to safeguard retired life, Sadagopan said.