India is witnessing a demographic shift in the way household finances are managed. Gone are the days when women in households were too shy to participate in financial decisions. The increase in representation of women in the workforce has resulted in a change in the traditional financial demographics of the average Indian household, where women now have a greater say in financial decisions.

In fact, it has often been highlighted in several research findings that women investors consistently outperform their male counterparts, perhaps owing to the fact that they spend more time researching their investment choices and delve deeper into the choices they make. A virtual panel discussion titled ‘Women and Wealth-ly Wise – Why women must take investing seriously and how Mutual Funds can help in this investment journey’, powered by Mirae Asset Mutual Fund, delved into this change, turning the spotlight on how women can turn their savings into smart investments and what role Mutual Funds can play in this journey.

The discussion began with how there has been a greater awareness amongst women to take charge of their finances over the last 10 years. Soumya Rajan, Founder and Chief Executive Officer of Waterfield Advisors, spoke about why it is imperative for women to take charge of their finances.

“Today, women control about 30 per cent of the global funds. What is also interesting is that in a 10-year period between 2018 and 2027, we are going to see a transition of worlds, which is close to about 4 trillion. And one of the major beneficiaries of that inheritance is going to be women. So it is extremely important that women start having a good understanding of how to manage their finances,” said Rajan.

According to a report by the Reserve Bank of India, women have more money lying idle in their bank accounts than men, and just about 7 per cent women are actually in charge of their savings through a journey of self-knowledge. The panel deliberated the reasons behind this. Sanchita Mukherji, Co-Founder and Partner at Blue Edge Associates and Managing Partner, Talk The Walk, Mutual Fund Distributors cited a stereotypical phrase, ‘women save men invest’.

“I think the traditional roles have blurred. A woman is no longer just a caregiver or a housewife or somebody in the background of the family. We have progressed as a nation from a joint family background where it was taboo to even talk about money and finances at the dinner table because the woman would feel that it might lead to certain levels of mistrust with other family members or a discord with your partner. Today, in a nuclear family setup, that is no longer the case. Discussions on money, succession, and children’s upbringing are all being very proactively looked at,” she said.

There are many studies that reveal that women actually outperform men when it comes to investing. For instance, a Fidelity study done over a 10-year period revealed that women investors actually outperform the men by 0.4 per cent. A Wells Fargo study stated that risk-adjusted returns for women are far higher. Women have what it takes to venture off the ‘safe’ path of investments — they have patience, a sense of anchoring, and are highly disciplined — all of which are needed to succeed in capital markets.

“Women investors tend to veer towards tried and tested asset classes such as fixed deposits, chit funds or gold. But, if we add one more layer of working women, about 73 per cent of working women invest and about 49 per cent of them invest in capital market-linked assets, whether mutual funds or stocks or NPS. So, when there is access to money and a familiarity with investments, the confidence to do that goes up multifold,” said Arpita Vinay, Co-head of Spark Capital.

As more women take charge of their wealth, an investment category that is emerging as a favourite is Mutual Funds. According to the Association of Mutual Funds in India (AMFI), the number of women investing in Mutual Funds increased to 74.49 lakh at the end of December 2022 from 46.99 lakh in December 2019.

Suranjana Borthakur, National Head – Banks and NDs at Mirae Asset Investment Managers (India) Pvt Ltd, had an interesting observation. “The role of financial planning in the household has been very typecast. Less than one-third of the total number of women who are investing are actually making the decisions on their own. While they may be making a lot of other very significant decisions at home, when it comes to investing in a financial product or buying a house, the involvement of the woman goes down substantially. Normalising talking about money management and investment decisions at home is extremely essential, and Mutual Funds can offer a good avenue here.”

Mutual funds can play a very large role in this journey because they are a very affordable route to investing — you don’t need a large corpus to start investing and can start with any amount. Also, you can leave the investment decisions to an expert or a fund manager. It is also a very liquid option, as you can take out the funds you need at any point in time. In India, Mutual Funds are a very egalitarian solution because everybody gets the fund manager’s expertise, whether you are a large or small investor.

The panel then offered some ground rules on investing that women can look at. “Get the foundation with whatever amount of investment money you need for your peace of mind and put that in a less volatile asset class. That’s not where you are maximising your return. You are maximising your peace of mind. The easiest and the most foundational part of building a portfolio would be discipline, some amount of monitoring, maybe even an index fund or one of the large-cap funds. Then, look at a small or midcap,” said Vinay.

Rajan added: “The first thing you need to do when you have an investment portfolio is list down the financial goals that you are actually trying to achieve and use that to create an investment policy statement that defines your risk boundaries. The next step is to have risk pools where different assets have different risk allocations. Then, you look at asset allocation and then fund manager selection. Here, you select the mutual funds that have had consistent performance over the years. And, the last thing you look at is the cost of investment, because that also plays a very large role because if you are going to be paying out a lot of fees or distribution fees or otherwise, then you are not allowing compounding to actually happen because it is ultimately coming out of the returns.”

If you are trying to build long-term wealth, it is important to get an advisor who can help you with changing market dynamics, themes of the future, looking at the past performance of the funds you are investing in, etc. “As a first-time woman investor, you need to start small, gain confidence, gain education, seek advice, and then build up to scale,” said Mukherji.

The panel concluded that people often seek advice on the one magic product that they should invest in. But that is not the right approach. “Investing is not about being good at maths. It’s about having a process, being disciplined, and having an entire plan laid out, which you then stick to. Once you have followed that process, start with simple products and stay committed to your plan. Don’t churn your portfolio often and stick to your investments,” said Borthakur.

This is an Investor Education and Awareness Initiative by Mirae Asset Mutual Fund

All Mutual Fund investors have to go through a one-time KYC (Know Your Customer) process. Investors should deal only with Registered Mutual Funds (RMF). For further information on KYC, RMFs and procedure to lodge a complaint in case of any grievance, you may refer the Knowledge Center section available on the website of Mirae Asset Mutual Fund.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.

For information on one-time KYC (Know Your Customer) process, Registered Mutual Funds and procedure to lodge a complaint, refer to the knowledge center section available on the website of Mirae Asset Mutual Fund

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.