Let’s talk about some investment mantras that women can use to maximize their financial potential on International Women’s Day.

International Women’s Day is a day to celebrate, honor, and recognize the women in our lives. Women have historically demonstrated that they are much more efficient at multitasking, whether at home or at work. How often have we seen these powerhouses adopt a much more disciplined approach to various activities, allowing them to effectively lead and execute each task?

As more women enter the labor force, they not only become financially self-sufficient, but they also lay the groundwork for future generations’ financial security. This phenomenon is not limited to urban areas; if one ventures into India’s rural heart, it is not uncommon to see women working as well as managing monthly finances. These sharp-witted ladies are well-known for devising novel approaches to money management. With rising awareness, the assistance of digital platforms, access to financial education, and rising social awareness, it is critical to understand financial autonomy and learn investment decision-making skills in today’s time.

Let’s talk about some investment mantras that women can use to maximize their financial potential this International Women’s Day:

Set specific financial goals:

Goal setting is an important aspect of personal finance management. Set clear financial goals and prioritize them based on various needs, investment tenures, objectives, and so on. The goals can be further subdivided into long-term and short-term goals, allowing one to chart clear paths to achieving these financial objectives. Furthermore, investors should be aware that it is difficult to predict market performance with absolute certainty. As a result, rather than focusing on market timing, investors should begin investing as soon as possible. Historically, the market has rewarded patient long-term investors.

Diversify your investment portfolio:

An investor’s exposure to a specific asset is determined by her investment goal, time horizon, and sector performance. While the concept of goal-based investing is not new in India, investors should look for products that are directly related to their objectives. As a result, diversification is essential for a successful investment strategy. Diversifying your investments across asset classes and geographies is critical for reducing risk and optimizing returns. Diversification across asset classes can be supplemented with diversification across styles (Growth, Quality, Value), allowing investors to capitalize on multiple market opportunities.

Pursue quality:

Regardless of the ultimate financial goal, investors must consider investing in companies that promise ‘Quality’ on a regular basis. The goal of quality investing is to find opportunities in profitable and cash-generating businesses. A better understanding of an organization’s structure and operations can help predict its future performance. Given the current macroeconomic indicators, investors are urged to stick to the fundamentals of a ‘fundamentals driven investing approach that focuses on healthy consistent growth, cash flow quality, and RoE over the long term. A bottom-up strategy that focuses on the company’s potential will be beneficial in the long run for wealth creation.

Create an emergency and retirement fund:

Because emergencies frequently occur without our knowledge, it is best to be prepared for these occurrences. It is critical to invest in an Emergency Fund that will provide an investor with liquidity in a timely manner. In times of financial crisis, this emergency fund can help them avoid having to dip into their investments or take out loans. Creating a retirement fund is also an important step toward financial independence. It is a set-aside savings plan that ensures they have enough money to live on during their retirement years.

Consider the passive route:

Passive investing has begun to gain traction among the Indian investor community. They not only provide the opportunity to create a diversified portfolio by replicating the underlying index’s weights and returns, but they also ensure lower tracking error and any bias from the fund manager’s end. Investors in India can invest passively using ETFs, Fund of Funds, and Index Funds. They are no longer based on a single index, but have evolved to include thematic and sector-oriented funds that can potentially provide investors with returns.

Keep emotions at bay:

With so much information flooding the market, it’s easy to become distracted by the noise and lose sight of the investment goal. When a new trend gains traction or the price of a particular stock falls, most investors are quick to buy or sell. These behavioral biases (whether cognitive or emotional) may eventually harm the portfolio in the long run. What investors must understand is that prudent investing necessitates maintaining an objective perspective in order to avoid making irrational decisions.

Finally, they say that “experience is the best teacher,” and the same holds true for investments. It is critical for investors to want to curate their financial journey and understand the various investment options. After all, it is your money that you are hoping will appreciate! While it is always recommended to seek the advice of financial advisors before making any investments, taking ownership of your investments is the first step toward building your portfolio and making informed decisions.