Investment for homemakers

"World's changing, it's time we change too!"

“We” in the quote mainly emphasizes on women or rather the homemakers. Each and every woman plays a very crucial role in their families that it won’t be wrong in saying,

"Behind every successful man there is a woman"

Usually the wife is in charge of handling the monthly income of the family where she pays all the taxes and expenses along with managing savings for the entire house. It's financial planning and it's like they're born with it.

While the way they save the income is impressive, but merely savings is not enough to maintain their finances because the value of money decreases every year. For example, a person was able to buy a latest iPhone for about Rs50000 in fiscal year 2014, but now in 2020 one has to spend up to Rs1 lakh to buy the same. So, this increase in value of the latest iPhone across the years is time value of money. One cannot buy the same amount of items that he\she bought for the same amount few years back.

So, the savings has to be channelized in a system where it's safe and results into an increase in finances through sufficient returns. Curious to know how? Here are some tips for the homemakers to channelize their savings into most productive investment avenues:

1) Direct Equity:

Direct Equity has higher risk but at the same time provides higher returns.

But why direct equity for homemakers?

The homemakers know the reach of the products so well because who would not be aware about something they deal with regularly? Final consumers know the product better than any other board members sitting in the cubicles, who never really used the product.

2) Mutual Funds through SIP:

A mutual fund is a trust that pools the savings of a number of investors, who share a common financial goal. Mutual funds provide tax benefits and proves to be a very good option for homemakers to start with. One can start investing in mutual funds for an amount as minimum as Rs.500 and help in long term wealth accumulation as well. These are less risky than direct equity because it includes professionals which invest on behalf of the retail investor and thus, chances of loss are comparatively low.

3) Public Provident Fund:

Public Provident Fund (PPF) is a safe option which give higher returns and being a government scheme, its deposits are very feasible and varies from Rs500 to Rs1,50,000 in a fiscal year. It also provides tax benefits up to Rs1,50,000 under the section 80C of IT act. It’s returns are estimated to be 7.1% compounded annually.

4) Bonds: 

If the risk-appetite is low, one can always invest in bonds. Bonds are loans that carry an interest and have a fixed maturity period. Bonds are issued both by the government as well as private companies to meet their funding requirements. The various kinds of bonds are truly a great instrument for tax saving.

5)National Saving Certificate (NSC):

National saving certificates are issued by the Government of India and can be purchased for a minimum of Rs 1000. It provides annual return of 6.8% which is paid at its maturity i.e. after 5 years. It also provides tax benefits up to Rs 1,50,000 under the section 80C of the IT act.

6)Bank Fixed Deposits:

One can opt for the old and traditional fixed deposit, if they are unsure about the other schemes. Fixed deposit is the simplest and the easiest way to invest your money and develop a habit of saving. Moreover, fixed deposit promises higher returns than saving accounts. It has a fixed lock-in period in which one cannot withdraw the money before the maturity or else the interest earned would be lost.

‘Homemaking is the art of making a house a home.’ And choosing the correct investment scheme could eventually help to build that home on a stronger base.