Financial planning for homemakers made easy

It is essential for women—working women or homemakers—to keep themselves and their family financially secure. Earlier, women had a habit of keeping savings in containers in their kitchens, but today that is not going to get our savings anywhere when confronted with ever-growing inflation. It is wise to choose to invest and wiser to choose the best investment in order to keep our family and ourselves financially secure.

A good Investment gives better returns than merely saving in a bank deposit or in our piggy bank, and helps us to cope up with inflationary pressures.

Women and investments? Homemakers and Investments?
Not a good combination, most people would say. Many people think homemakers make very bad investors, as they do not have knowledge about the share markets and the technical aspects of investing. Looking from a fundamental analysis point of view, they are the ones who could be good investors as they make all purchase decisions for the entire family and they are aware which company performs better for what reason. They need not have to make decisions by looking at the balance sheet of the company. They are the main consumers of most of the products around. This is a strength, which can help them analyze stocks and invest in shares and equity. They are uniquely qualified to buy and sell shares.

How does a homemaker choose appropriate investment options?
The best way to plan your investment is to know your goals. Take a piece of paper and write down what you would like to achieve in your life. You might want to have a house of your own, probably a luxurious car, a world tour, etc. These things are not immediate but need to be achieved some day. These are your long-term goals. There are a few other things that you may want to achieve in two-three years, for example higher studies, marriage, purchase a two-wheeler etc. These are your short-term goals. Remember, your short-term goals keep changing as you move on in life. Your short-term goals today are not going to be the same when you become a mother.

Where to invest in your 20s
In your 20s, you are likely to be in your college or at your first job, so your income is going to be very less. You can choose to invest in a recurring saving deposit or bank deposits, where you can earn low but regular and fixed returns. You can also choose to invest your money in mutual funds because the risk involved is lesser and you can invest very small amounts of money. Once you have started earning good money in your late 20s you can start investing your money in equities where the risk and returns are higher.

Where to invest in your 30s
In your 30s as homemakers, you might not have plenty of money to invest, but make sure you have a term insurance for yourselves and your family. A health insurance will help keep you more secure during times of emergency. Try to cut down unwanted expenses and invest in education funds for your children’s higher education, take up a suitable retirement plan for yourself and your spouse. Avoid endowment plans—they carry higher charges and may not give high returns. Avoid buying gold ornaments. They are only going to eat away your money in the form of wastage and making charges. Instead, invest in gold-based funds and buy gold in the form of coins/bars.

Where to invest in your 40s
In your 40s, you need to spend for your children’s education, save for their wedding, and also save for your retirement. If you are planning to build a 1,500 sq. ft house, take only 1,000 sq. ft for your accommodation, and rent the 500 sq. ft space, and use the money for investments. You can also take in a paying guest and use the rental and food charges for your short-term investments avenues.

Where to invest in your 50s
In your 50s you should invest in risk-free investments. If you need to withdraw your long-term investment for your son’s higher education, withdraw it or switch it to a debt fund at least a year before he gets the admission. Do not wait until the last minute, as you will be at risk if there is a sudden fall in the market.

In the 60s and beyond
Transfer your money into bank deposits or into a recurring deposit so that you will receive good returns and your money will be safe. Avoid risky investments.

Disclaimer: All information in this article has been provided by BankBazaar.com and NDTV Profit is not responsible for the accuracy and completeness of the same.