There has been a general perception that wh­en it comes to financial planning and investment women are risk-averse co­mpared with men. Some even go on to say that instead of taking charge of their financial future, wo­men duck taking decisions and leave it to the men to take ch­arge of financial planning and making investment decisions.

A cursory glance thr­o­ugh the financial literature throws up even more “fa­cts” based on so called “res­earch” to prove that women lack the knack when it comes to taking a call on financial matters. It’s even said women leave money matters to men in their li­ves or ignore the importance of financial planning altogether, though they are the sole breadwinners of their family!

To put it euphemistically, these arguments stem from a particular mindset that confines women’s role to kitchen. But the enhanced reality of today goes against the grain of these arguments. The world is moving fast forward towards gender equality and diversity with the rise of women in all walks of life. Equal opportunity and pay parity at work places are the flavour of the season. This binary to the dominant narrative on the imperative of closing gender gap is based on hard facts than normative judgments. From managing households to corporations, to mastering internet of things (IoT) to machine learning (ML) to running multi-billion dollar private equity (PE) funds to high-risk hedge funds, there are hardly any domain where women failed to make a mark.

There is even an ever growing argument that tilts the scale in favour of wo­men, which prods those investors who chase stable returns to put their money in firms run by women. Read it along with the fact that women face different life challenges and financial ri­sks compared with men, it becomes clear that why wo­men are fast taking charge of their money matters and are meticulous in planning financial future not only for themselves but also for others as well. At an individual level, statistics tell us that 9 out of 10 women were responsible for their finances at some point in their lives.

But the rising role of women in the financial firmament does not hush up some harsh realities. I also don’t buy the argument that the gender roles are being reversed with women calling all the shots when it comes to money matters. The truth lies somewhere in between.

It remains a truism that less than 15 per cent of women feel responsible for planning for their retirement lives and still less number of women participate in their employer’s pension plan. Thus it becomes less encouraging when it comes to widowed and elderly wo­m­en who were destined to li­ve in penury. Part of the bl­ame for this should be sha­red by our social milieu th­at limits the scope for wo­m­en to stay ahead and more importantly, stay relevant.

This throws up the curious case of disproportionate representation of women in the workforce despite the fast evolving role of women in economic activities. Still, more than half of the women in our country work in traditional and informal sectors with relatively low-paid jobs sans any retirement plan. Therefore, to find an enduring solution for this gender dichotomy, sticking to the following dictums may prove financially prudent for women in the long-run. These suggestions are not culled out from any textbooks on financial planning nor based on any “research” findings based on a biased sample universe. Rather, these are hands-on observations based on my long-stint in the financial sector as well my relentless interactions with clients.

A matter of age: There are three crucial stages in a woman's life pertinent to their age. First one is 25 to 35 years of age followed by the second phase starting from 35 years and ends in 50. And the rest of a woman’s life cycle starts from 50 years and above.

For an average woman, investment objectives of these three stages are distinctly different from each other. First stage is the accumulation phase, which gives her enough headroom to go forward with an aggressive investment strategy since she has more funds to invest. This is because during this age, her commitments will be comparatively less so she can put more money in equity-linked schemes, where risk-reward ratio is higher. In stage two a moderate portfolio is ideal meaning diversifying the risk profile by parking funds in a 60:40 ratio in equity and fixed assets. In a sense this is akin to the risk-on, risk-off investment strategy followed by ultra rich individuals and bulge bracket investment firms.

This asset diversification is important since she ne­e­ds to allocate or distr­ibute her wealth for some of her life goals. During the third stage it is wise for a woman to follow a conservative investment strategy as she nears the distribution stage of her life with its immediate financial needs. She should keep a part of her money as a contingency fund in safe havens though returns may be moderate so does the risk.

Investments vs savings: Second is the issue of asset allocation. Women should give more importance to investments rather than savings. Here the power of compounding is an effective tool in the case of investments. Investment in various asset classes will lead to risk mitigation and diversification. So she should diversify her investments among different asset classes such as equity, bonds, gold and real estate. For this MFs are ideal investment vehicles since their portfolio contains all asset classes.

Planning for protection: The third important point is planning for protection. Every woman must take a good health insurance plan with a woman critical illness cover, as the premium at young ages is lower.

Balancing family budgets & investments: It goes without saying women are the backbone of the family and as a person who understands every pulse of the household they should be spearheading the fin­a­n­cial planning process. Plan­n­ing family budget and invest­ments has gathered ste­am since financial products and services have become really complex nowadays.

Financial planning: Last but not least is the need for financial planning for wo­men. Statistics say that du­ring the last decade, there is more than 30 per cent increase in the number of wo­rking women in the co­un­try. Today, young women are more aware of the risk-return aspects of the financial market instruments and are urged to do a focu­sed financial planning from the beginning of their career. There are several online financial planning platforms available which help them get the best inves­tment choices available on­ce they key in their inves­tment details, financial go­als etc with ease.

Against this backdrop, I can argue that amid persi­s­tent gender inequality in everything from health outcomes to pay, if one gap is gradually narrowing that is wealth. It is said most private wealth that is set to change hands in the coming decades is likely to go to women. As money manag­ers seek to serve rich wom­en, and as those women express their values through their portfolios, the impact will be felt beyond the inve­stment eco-system. By foll­owing the 4 financial ten­ets delineated above, the women of today can stay ahead and stay relevant in the country’s financial firmament going forward.

(The author is investment analyst at Geojit Financial Services)