The value of the work that housewives do, is often undervalued as it is not weighed in monetary terms. But their value addition to the functioning of the household is immense – so much so that they are entrusted with the money earned externally. Indian housewives are naturally endowed with the gift of excellent financial planning using the limited resources at their disposal and manage to save some amount, irrespective of how extravagant the spending for that month might be. These savings at their disposal can be converted into money sputtering machines.
Having run this idea in your head umpteen number of times, do you wish to put it into action? Then you have come to the right place!
What is an Investment Plan?
These are financial products that are essential in order to systematically achieve one’s financial goals. It does not only contain the financial goal that one seeks to achieve but the means through which it can be met in specified time duration.
What are the Main Objectives of an Investment Plan?
Some of the common objectives of investment plans are safety of investment, a guarantee of return, and tax minimization.
What is the Importance of Having an Investment Plan?
Investment plans are important as they help one maximise the benefits derived from savings. It will also ensure that the risk undertaken to accumulate wealth is minimized and in tune with the risk-reward ratio. It also brings about financial discipline in the investor.
What are the Benefits of Investment Plans?
A well-thought investment plan enhances your financial portfolio in the following ways –
- Wealth creation through limited efforts for multiplication of stagnant funds.
- Return on investment secures the future of your loved ones.
- Ensures that financial goals aren’t burdensome and achieved easily, through sustained effort.
- Flexibility in choosing the components of the investment plan.
- Making use of tax benefits available under law.
What are the types of investment plans? How do you choose the right investment plan?
A well-chalked-out investment plan offers several benefits such as – long sustainable returns, capital appreciation as well as tax benefits. But in order to maximise the benefits derived from an investment plan, one needs to gauge his or her risk appetite. The categorisation of different investment plans based on one’s risk appetite is as follows –
- Low risk investment – these portfolio investments are generally low risk and have low volatility. There is a reliable and stable growth of capital, but the returns received are not very high. This might seem like a fair trade off in light of the minimal risk involved. Some investments that fall under this category are National Pension Scheme, Public Provident Fund etc.
- Medium risk investment – these portfolios offer diversified and balanced investments providing opportunities for growth, moderate risk and acceptable levels of market volatility. Some examples of medium-risk investments are monthly income plans, arbitrage funds and hybrid debt-oriented funds.
- High risk investment – these portfolios experience a high degree of volatility and the returns promised in the long term is high. Some examples of investments under this category are direct equity, mutual funds, ULIPs etc.
While choosing a plan for oneself, it is important to keep in mind the following things –
- Determine your financial goals.
- Evaluate the various means that can be used to achieve these goals.
- Identify the tenure available to achieve these goals.
- Analyse the pros and cons of each of the investment plans and how they are placed in light of the investment goals set.
- Create a diversified portfolio and allocate your corpus among each of the investment plans with care.
- Periodically monitor the progress toward your investment goals.
- Review and reorient the plan in case of deviation or failure to move toward a specific goal.
- Also, certain important questions need to be answered while creating this investment plan. These would include asking –
What are the Investments that a Housewife Can Opt-in for?
Sukanya Samriddhi Scheme
As a housewife that is constantly thinking about her children’s future, it is a prudent decision to invest in the Prime Minister’s Sukanya Samriddhi Yojana Scheme that was launched with the sole purpose of encouraging parents to secure the future of their daughters. The SSY account is to be opened before the minor girl child turns 10 year old with a minimum investment of Rs. 1,000 a year and a maximum of Rs. 1,50,000. The account will be valid and running for a period of 21 years so long as payments are made annually.
Child Education Plan
A child education plan is an investment cum insurance plan created with the sole objective of securing funds for the education of one’s child. Housewives can invest in this to secure the future of their child. There are four main types of child education plans, namely, single premium child plan, regular premium child plan, child unit linked plan and traditional child endowment plan.
National Savings Certificate
For those who have very little savings at their disposal, but wish to invest nevertheless, the National Savings Certificate is an excellent option. The minimum amount that is to be invested is Rs. 100 and there is no upper limit for investment. The interest rates change annually and the interest received is covered under Section 80C of the Income Tax Act.
Gold Mutual Funds
While it is a popular belief that investing in gold is a good investment, there is a better, more viable option that is available in the market than the purchase of physical gold. These are known as Gold Mutual Funds. These instruments are a mix of stock and gold investments and are passive investments meant for conservative investors. These are market linked and offer higher amounts of returns.
Investing in real estate is a good option for those who are looking out for a regular rental income. Investors have the option to invest in commercial properties such as offices or shops or Residential properties such as apartments, individual houses, or villas or invest in Real Estate Mutual Funds to get high returns. The risk involved is comparatively lower and the returns are respectable and steady. The most important advantage of investing into real estate is that it will help in diversification of investment assets.
A market-linked investment that promises returns high enough to overcome inflation, mutual funds are ideal investment plans for diversification of risks. There are various types of mutual funds that one can invest in such as equity mutual funds, debt mutual funds, hybrid funds, balanced funds etc. These diversified investment portfolios help one achieve their investment goals through informed decisions.
Long-term wealth accumulation requires financial discipline and there is no better embodiment of this discipline, perseverance and agility. The most important factor is to understand the risks and the working of various financial instruments before investing. Opting in for either of the options given above, over a considerable period of time can guarantee a steady flow of money that would contribute to the financial security of the housewife and her household.
Frequently Asked Questions
- Is there a right time to start investing?
There is no such fixed time that one must start investing in, though most financial experts use the mantra “the earlier, the better”. This is strongly endorsed as in this day and age, with rising prices, inflation, consumerism, pressure to achieve in lesser time spans, there is a need to create a strong financial backing to support it.
- Is purchasing gold a good investment choice?
It is preferable to not invest in gold only. It can be bought as one component of the investment portfolio and not in the jewellery form.
- What is an investment style? How do you identify it?
An investment style is a product of one’s investment goals, risk tolerance power, and attitude toward investing. For instance, if one is an aggressive investor, then he or she would like to invest in equities that are subject to high market volatility yet yield high returns. A conservative investor on the other hand, would like to play it safe, and is happy with lesser returns.