At a time when the whole world is busy talking about equal opportunities for all, celebrating “Women’s Equality Day” on August 26 every year seems like a reminder to everyone about the gender gap that still exists both in form and spirit. The concept behind commemorating this day is to inspire both individuals and groups to actively champion gender equality and work towards creating a world that is more inclusive and fairer for everyone.
The goal of women’s equality continues to shift, especially, with different people expressing different views on the same. However, one factor that underlines the journey to ensuring equality for the fairer gender is to encourage them to manage their wealth better. FinEdge, recently carried out a study to gain valuable insights into the financial goals and investing patterns of their women clients from the age bracket of 23-76 years.
The survey results are based on the data collected from more than 3,763 women clients across the country. An assessment of the details collected reveals the following information.
- There is a 42 per cent rise in women investors, up from 18 per cent in the company's inaugural year.
- 87 per cent of women opt to put their money in equity funds.
- On average, women investors are saving five per cent more per month for their future goals compared to men.
- Roughly, 30.82 per cent of women named retirement planning as their top priority goal, marking a significant shift in financial planning.
- Women's goal-based SIP investments show an impressive 19 per cent lower stoppage rate, reflecting their long-term commitment to financial goals.
Harsh Gahlaut, CEO, FinEdge said, “We are delighted to see more and more women leading the way and helming their family's financial plan. Temperamentally, women make better investors than men as they are less speculative and more purpose-driven. This makes them excellent long-term investors as their resilience allows them to benefit from compounding. We are certain that this trend will gather momentum in the next three to five years.”
Explaining women’s unique investment approach
How women look at their finances is different from the men in their families and offices. One reason that can be attributed to their distinct investment approach is their need to frequently leave or change jobs in sync with their families’ requirements. The frequent career breaks they take to care for their loved ones have a lot to do with how they view money in the light of earnings, savings, and investments. This also explains why many of them continue to be averse to taking unwanted risks to earn higher returns in the long run. Perhaps, it is the life fraught with risks and responsibilities that prompts so many women to adopt a more balanced approach when handling money matters. However, this does not mean that women turn their backs on risky investments completely.
Another interesting inference was that 87 per cent of women opt for equity-oriented SIP investments, slightly below men at 89.9 per cent. This statistic is a clear indicator that the new generation of women investors is no longer shackled by their innate risk aversion. The average age of women investors was found to be 38.67 years, which was around two years less than the average age for male investors, which came in at 40.34 years.
Some of the key challenges that women investors face on their wealth creation journey:
- Career breaks for family care
- Excessive risk aversion affecting returns
- Distrust in sales-focused advisors
- Limited awareness of key investing concepts
- Confidence gaps due to traditional gender roles
Focus on planning for retirement
Retirement planning is gaining traction among women. A notable 30.82 per cent prioritize it, second only to child education planning at 32.82 per cent. This shift marks a new era where women independently plan for retirement or contribute equally to joint plans, ensuring financial resilience in unforeseen life events.
“Without a doubt, the increasing number of women who are entering the workforce and excelling at their careers is driving the trend towards increased financial independence,” added Gahlaut.
Of course, retirement planning is a big part of one’s financial goals, and most women are attuned to this feeling and sense of responsibility. On average, women have 3.47 financial goals, while men have 3.74, showcasing a holistic approach. Women invest an average of ₹14,347 monthly, slightly higher than men at ₹13,704, challenging traditional assumptions. Notably, women show a five per cent higher monthly savings rate for future goals. Additionally, women’s SIP investments have a 19 per cent lower stoppage rate, affirming their resilience as long-term investors.
A unique investment approach
While evaluating how women invest and manage their investments and verifying how women decide on their investments before putting their money in the options they prefer most, it was revealed that women focus most on the following factors while deciding why, when, where, and how to invest their earnings. These include:
- Trustworthiness and reliability
- A non-sales-centric approach
- A goal-based investing platform that is not complicated
- Handholding by an investment expert who is willing to explain the nuances of investing
- Empathy, Sensitivity and Customization
For an investment management firm focusing on the needs of female clients, considering all of the aforementioned factors is crucial. Conventional sales-oriented setups, such as bank relationship managers, and impersonal DIY platforms like robo-advisory services, often fall short in addressing their distinct preferences. A synergistic bionic approach that harmonizes technological innovation and human involvement emerges as the pivotal factor for triumph in this specific segment.