On Women’s Day, it’s time to rethink traditional investment options like physical gold and insurance plans, which may provide safety but don’t help build wealth. Instead, consider alternatives like sovereign gold bonds and balanced advantage funds.
Traditional investment options like physical gold and insurance plans have long been considered safe choices for building wealth. However, it’s time to reassess these options and consider better alternatives to help women create a strong financial portfolio.
While often seen as a secure investment, physical gold comes with a high cost. When buying gold jewellery, 30 per cent goes into wastage and making charges, and when selling, 5-10 per cent is deducted, resulting in a 40 per cent overall cost. Gold jewellery deposit schemes are not regulated, and the accumulated corpus can only be used to purchase jewellery, not gold coins or bars. In contrast, sovereign gold bonds (SGB) have no cost, are tax-efficient, and can be listed on the stock exchange, providing a better investment option.
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Insurance plans, while perceived as safe, are not actually market-linked and return only 4-5 per cent per annum, which does not beat inflation. Investment-linked insurance plans also have high costs, and a premature exit can result in less capital returned. Balanced advantage funds, on the other hand, offer better returns with lower costs and take care of asset allocation and rebalancing.
As we celebrate Women’s Day, it’s time to make crucial changes to our investment portfolios. Consider alternative options that can help you build wealth while still providing safety and security for your financial future.
Reasons why today’s women should empower themselves with their own investments
In today’s world, women have proven their mettle in various fields and have shattered several glass ceilings. However, when it comes to financial matters, they tend to lag behind. Women tend to leave financial planning and decision-making to their male counterparts. However, it is crucial that women actively participate and have an equal say in all financial matters concerning their families. Women bring a unique perspective to the table and can contribute in ways that men may not be able to. Moreover, equal participation would lead to gender parity, creating a level playing field.
In fact, the Government of India is also focussing on encouraging women to manage their finances from earning to investing by their own self by introducing multiple investment schemes for women like Sovereign Gold Bonds (SGBs), New Mahila Samman Savings Certificate, Children Gift Mutual Fund, Public Provident Fund (PPF), National saving Certificate, Unit Linked Insurance Plan (ULIP).
Sovereign Gold Bonds (SGBs): SGBs are treasury bonds that are valued in grammes of gold. They serve as alternatives to actually holding gold. Cash must be used by investors to pay the issue price, and the bonds must be redeemed in cash when they reach maturity. On behalf of the Government of India, the Reserve Bank issues the Bond.
New Mahila Samman Savings Certificate: Mahila Samman Bachat Patra Yojana 2023 is a savings scheme launched by the government of India to encourage women to save money and become financially independent. In this scheme, the deposit is fixed at Rs. 2 lacs with an interest rate of 7.5% for a period of two years.
Public Provident Fund: An investment scheme where an individual can deposit an amount in their PPF account every month as per their capacity and earn interest on it. But the money deposited in the PPF account is in a lock-in period of at least 5 years.
Unit-Linked Insurance Plan (ULIP): A unit-linked insurance plan (ULIP) is a flexible solution that gives customers access to both insurance protection and investment exposure in bonds or stocks. Policyholders for this product are obligated to pay recurring premiums. Most of the premium money is pooled with the assets of other policyholders and invested in either stocks, bonds, or a mix of stocks and bonds and insurance coverage.
Disclaimer: Investments in the securities market are subject to market risks, read all the related documents carefully before investing.