We know the number of equity investors in India is less – between 3 and 4%. Compared to other developing and developed nations, we are nowhere in the race. The worst part is that the number of women investors is even lower. As per a recent study, out of 100 investors in India, only 21 are women.
Let us look at this differently. For every 10,000 people in India, only 400 invest in equity (assuming 4%). Out of these 400 only, 84 are women.
If the number of investors in India has to increase, women have to start investing in the equity market. Investing is like any other skill – swimming, cooking which everyone should know. There should not be any gender to it. Let us look at different reasons why more women should start investing:
Financial independence is for all – It is the harsh reality of society, but women in India retire at a much early age. In some cases, they have to leave lucrative job opportunities or promotions as they are committed to the family. For these reasons, it is essential women should start an investment as early as possible. The equity investment will make sure they can create substantial wealth before they decide to retire. Today, many people plan to retire at 40. The reason they can do so -they started investing in equity from an early age. If women start investing early, they can too become financially independent and decide to leave their job as and when they feel like (if they feel like) without thinking much about the financial impact on the family.
Women live longer – World Health Organization (WHO) has in a number of its report mentioned that on average, women live five years more than men. It means women have to plan for retirement for a much longer time. It also means that they can make the most of compounding. All they have to do is start early. They don’t have to continue for long – compounding will take care of the retirement. So don’t delay your investments and start now.
Financial goals – We invest in equity because we want to accomplish specific financial goals. After marriage, fulfilling aspirations becomes a couple’s goal. You dream together and work towards fulfilling them together. However, women may have financial goals of their own. For example, women can dream of having a vacation home in the mountains. One way to achieve such a financial goal at the individual level and for a family is to start equity investment.
Inflation – Inflation does not see gender. It eats the money at the same pace for both men and women. We have done a survey and found they close to 55% of women prefer to invest in fixed deposits, PPF, and gold. The average return in most of these instruments is below inflation. Hence, technically not a good investment option. You can have small amounts in these financial instruments, but a substantial percent of your portfolio should be in equity. It makes more sense to have a higher equity investment in the 20s and 30s.
Increase the net worth of the family – After marriage, you work as a team to fulfil dreams. In metro cities, women have started to take financial decisions in the family, which is awesome. The problem, as mentioned above, is that men are only investing in equity in most families. When women also start to invest in equity, the family’s net worth increases at a much faster pace. To ensure you become financially independent as a family, women should also invest in equity.
Become a role model – In the recent show Shark Tank, we see three female entrepreneurs matching shoulders with men to invest in equity (startups). They have become role models for the young women in the country. When you invest, you also become a role model for all the girls and women in your circle. You will influence many women to start investing – that too at an early age. It is something that is the need of the hour.
An interesting fact – women are better investors!!
Yes, you have read it right. There is substantial data available that suggests that women’s portfolio outperform their male counterparts. Not only individual portfolios, as per Fidelity report (2017), women-run portfolios have performed 40 basis points better than men. Over time, it creates a massive difference in the returns. Are you wondering how? The reason is that women have inherent qualities that make them better investors. Women, in general, are more risk-conscious, tend to do more research before making decisions, and are a perfect example of ‘slow and steady wins the race’.
Another reason why women perform better than men is that they have a better long-term investment perspective. They don’t sell their investments frequently. One of the main reasons investors don’t make more money in the market.
We believe early retirement and financial independence concepts are only associated with men for now. It should change, and more women should enter the stock market and start their journey towards financial independence. They can also create wealth for themselves, their loved ones, and future generations. The market works wonders irrespective of gender, and hence every woman should start the journey. If you think a stock investment is way too complicated, we have good news. You can invest in equity without any research, and you can continue to spend time with your family. You can download Jarvis Invest and get started with your investment. It is an AI-driven platform that will help you create wealth depending on your investment horizon and risk profile.