Women’s Day: Five Investment Options For Women
Investing is an essential aspect of achieving long-term financial goals and securing financial stability. With women becoming an integral part of today’s workforce and economy, it is significant that they also invest and protect the money they earn.
Working women in India, are now, more than ever before, engaging with investment instruments and financial services. Traditionally the participation of working women in alternate investment options have been lower than male investors. However, things are changing for the better, the pandemic has triggered a rise in the number of female investors. Let’s look at the five most popular and emerging investment options at disposal of today’s Indian women.
Firstly, bond investment is one of India’s most popular investment options. Money is lent to a company or government, which promises to pay the investor back with interest. Bonds offer a fixed rate of return and are generally considered a lower-risk investment option than stocks. Bonds have gained a newfound impetus in the light of new-age online investment platforms democratizing the asset. India’s 5-year government bond has a 7.391 per cent yield which reached a maximum of 8.232 per cent in September 2018 and a minimum of 4.84 per cent in July 2020.
Peer-to-peer (P2P) lending is yet another investment avenue that has gained traction in recent years and can become a great investment option for women. It involves lending money directly to a group of individuals or businesses through an online platform. Investment returns are higher compared to traditional investments, but it carries a higher risk of default. Interest rates vary between 10% to 15% per annum.
Lease financing is one more asset class that has gained popularity in recent years. Women can lease out a plethora of assets, such as property, larger machinery or equipment, aeroplanes and even laptops for a fixed period. Investors earn a regular rental income, in return, the lessee gains access to the asset without having to purchase it outright. Assets such commercial offices, shops in mall complexes and warehouses can give a yield of 5-9 per cent.
Invoice discounting is another trending investment option wherein female investors purchase unpaid invoices of a business at a discount. The investor then collects the full amount of the invoice when it’s due, earning a profit from the discount. Invoice discounting can provide a relatively stable income stream, but it requires a thorough understanding of the business's financial health and creditworthiness.
Fractional Ownership is another investment option that’s gaining popularity, amongst today’s working women, driven by the fact that it has opened traditionally restricted asset classes to the average investor. It allows investors to own a portion of a grade-A expensive asset without having to purchase the entire asset. Fractional ownership is a valuable option to diversify the portfolio, and earn a fixed income and it also has the potential for long-term capital appreciation. Traditionally assets such as commercial real estate have been limited to high-net-worth investors driven by high ticket size, locational constraints and information asymmetry.
Online platforms facilitating fractional ownership of commercial real estate have now opened up this high-value asset class to the average female investors. It has grown popular alternative investment option due to disappointment from conventional assets in the last 2-3 years. Fractional ownership is likely to attract billions in investments in light of 13% to 16 per cent projected growth for the Commercial Real Estate space in India. Fractional ownership gives both regular incomes in the form of rental yield and asset appreciation from the upside potential of the concerned property.
Women can look at these asset classes not just as investments but also as tools to gain financial independence and security. Time-tested and low-risk or fixed-income instruments like bonds and public provident funds have helped working women achieve financial security. At the same time, depending on their risk profile, women can opt for alternative investment options like fractional ownership. Their risk tolerance, confidence and willingness to invest will shape the world for years to come. (PPF)
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