Check Info about Best Investment Options for Women (2024)

Reasons Behind the Importance of Investment for Women

Here are the reasons why investment is important for women:

1. Financial stability and independence: Regular savings help meet future goals and provide support in times of financial emergencies. Women can invest on regular basis to build their corpus and enjoy financial independence and stability.
2. Financial support for parents: Old age creates financial instability due to various reasons such as physical health, reduced income, and many more. Women can invest regularly in their parents’ healthcare to support them during any health emergencies, be it physical or mental health issues.
3. Securing the future of the children: The educational career of the children is the responsibility of both parents. Not only married women, but it is vital for single mothers as well, to start investing to secure the future of their children and fund their educational costs when required.
4. Fulfilling financial goals of the family: Be it purchasing a house or funding children’s education, salary may not be sufficient to build the huge corpus required to fulfill the financial goals of the family. It is important to make an effective investment plan for women.

Best Investment Options for Women

The following are the types of investment options that are ideal for women:

1. Public Provident Fund (PPF): PPF is one of the safe and reliable investment schemes offered by the government. It is also one of the ideal investment options for women that helps them save their hard-earned earning by making small investments.
2. PPF is also one of the best investment options for working women as it helps in saving tax on interest earned on PPF.

Here are some more features of PPF investment:

1. PPF account is offered by most of the financial institutions and banks
2. Provides tax-benefits under Section 80C of Income Tax Act 1961

1. Allows minimum and maximum deposit of Rs.500 and Rs.1.5 lakh, respectively
2. PPF is safe as it is a government investment scheme
3. Lock-in period of PPF is 15 years, which is extendable for a block of five years after maturity
4. Current interest rate offered by PPF is 7.10%

1. Mutual Funds (SIP): Investment in Mutual Funds can be done through small amount or Systematic Investment Plan (SIP). There are several investment options available under Mutual Funds that depend upon the purpose of investment and risk tolerance level of the investor.

Here are the following reasons why most of the women investors choose SIP:

1. SIP is for those investors with low to medium risk tolerance level
2. Deposit amount is as low as Rs.500
3. Helps in diversifying the investment portfolio
4. Investor can opt for more than one SIPs compared to the lump sum method

1. Investor can opt for monthly or quarterly deposit for a fixed tenure

1. National Pension Scheme (NPS): Government of India launched the NPS in December 2022 and administered by the Pension Fund Regulatory and Development Authority (PFRDA). Women investors not willing to take any kind of financial risk can opt for investing in NPS.

The following are the reasons why NPS is one of the best investment schemes for women:

1. Two types of account types, which are Tier-I and Tier-II
2. Any Indian citizen of age limit 18 to 65 years are eligible for Tier-I

1. Existing member of Tier-I are eligible for Tier-II account
2. Minimum account balance for account opening for Tier-I and Tier-II are Rs.500 and Rs.1000, respectively
3. Minimum contribution for Tier-I and Tier-II account is Rs.500 and Rs.250, respectively
4. Offers tax exemption of Rs.1.5 lakh and deduction of Rs.50,000 under Section 80CCD (1) and Section 80CCD(1B)

Note: No tax benefits offered, and no minimum yearly contribution required for Tier II account.

1. Gold: Gold has a high social and emotional value among the women investors of India. Women prefer purchasing gold in various forms such as coin, bars, biscuits, and specially ornaments. Not only the face value of gold, but also the growth rate of this precious metal over the last 50 years have made gold one of the preferred investment options among women investors.

Here are some more reasons why gold is one of the best investment options:

1. Gold provides high returns even during inflation when prices of other commodities go up
2. Investment can be done on these bonds for a specific duration in form of jewelry or physical gold
3. Gold investment protects investment portfolio against market risk

1. Investment in digital gold helps converting gold bonds into physical gold

1. Fixed Deposit (FD): FDs are one of the most reliable and safest investment options offered by most of the financial institutions and banks. FDs offer a high rate of interest with guaranteed returns on maturity.

Here is why FD is one of the best investment options for women:

1. Investment tenure offered ranges between seven days to 10 years
2. Allows withdrawal at any time with applicable penalty rates

1. Senior citizen women can earn higher interest rates over FD rates for general public
2. Interest rate offered ranges between 2.00% to 8.00%, approximately
3. Offers various interest payout options such as monthly, quarterly, half-yearly or annually
4. Tax-saving FDs offer tax deduction benefits under Section 80C of Income Tax Act, 1961

1. Exchange Traded Funds (ETF): ETF or Exchange Traded Funds is a passive investment method which is considered one of the ideal options for investment for the women.

The following are the features of ETF:

Various investment options are available under ETFs, such as:

1.Currency ETFs

2.Equity ETFs

3.Commodity ETFs

4.Bond ETFs

1. Easy buying and selling of ETFs
2. Investors need to have a demat account for transacting ETFs

1. Performance of the index is matched and tracked by the ETFs

1. ETFs funds need not to be tracked continuously as ETF portfolio is not managed actively

1. Recurring Deposit (RD): Recurring deposit is one of the safest investment options that offers guaranteed returns and enables users to invest in small amounts. Investors can deposit on a monthly scheme and earn interest on specific period.

Here are the reasons why RD is the best option for women:

1. Investment tenure ranges between six months to 10 years
2. Customers can invest amount as low as Rs.10
3. Offers high liquidity and can be withdrawn anytime

1. Some banks may charge penalty on premature withdrawals
2. Senior citizen investors will earn additional interest rate over the interest rate offered to the general public
3. RD interest rates are compounded quarterly, and rates varies from bank to bank and the tenure selected

Points to Remember Before Investing

The following are the points that should be considered before investing:

1. Purpose of investment: To achieve the desired result it is vital to align your investment purpose with the investment instruments to meet your financial goals.
2. Investment duration: Consider the investment duration before investing in a specific fund as some investment tools do not allow withdrawals before maturity, while some charge penalties. Select your investment asset considering your requirement to make your funds accessible whenever required.
3. Lock-in period: Some investment instruments have a lock-in period that does not allow premature withdrawals. As a result, you will not be able to access the funds anytime. Consider your financial requirements and be aware of the lock-in period before engaging in a particular investment.
4. Expenses related to the investment: It is essential to determine the expenses related to the investment as various charges are imposed, such as penalty on partial withdrawal, management cost, exit lad charges, transaction cost, and others.

1. Liquidity of the investment asset: Some investment tools, such as stocks, fixed deposits, and mutual funds, offer high liquidity. These funds can be converted into cash and enable the investor to address financial emergencies effortlessly.
2. Tax obligations: Some investments are taxable, while some are tax-free. Make sure to consider the tax obligations and the various tax benefits before investing in a specific fund.
3. Returns offered by the investment: Research the asset’s performance before investing to ensure a guaranteed and high return after a specific duration or after maturity, to fulfill your financial goal.
4. Investment risk: Invest in a particular asset after determining the risk factor and your risk tolerance level as some investment tool comes with high volatility.