In the past decade, many women residing in urban areas have taken steps to become financially self-sufficient. Such a positive change should be supported with financial planning that ensures a successful outcome in future too. One such investment instrument that is fool-proof and ideal for financial security is the guaranteed return plan. A guaranteed return pension plan is essentially a variant of a life insurance plan that provides regular income to the investor.
This article discusses the five vital steps in financial planning that will help shape a secure future for working women and why guaranteed return plans in India should be an essential part of every financial plan.
Five steps in financial planning for urban women
- Educate yourself about money matters:
The first step in personal financial planning is to educate yourself about money matters. You must dive into your finances and get a clear picture of your income, expenditures, and investments. Many women rely completely on a family member or financial expert to handle their money, regardless of how long they have been earning. This, to an extent, leaves them in a lurch when it comes to absolute financial freedom.
To expand your knowledge, even basic know-how of the various investment instruments available in the market should be a good starting point. The next step would be to analyze which of these investments work for your financial goals and how you should invest in them. To top it off, you should also take back control of your accounts and learn to manage them, along with your insurance cover, medical cover, and income tax.
- Set clear objectives:
Once you have educated yourself with the basics of how the financial world works, set down a clear objective that is in line with your financial goals. One of the methods to do so is by asserting the amount of money you plan to gain in a defined amount of time. You can determine the amount of money and time period basis your financial commitments.
- Chalk out a plan:
Having set a financial objective, the next step is to chalk out a plan that will help achieve your goals. Take your current income and expenses into consideration while creating a plan. You should also consider your projected income and expenses for the financial year to get a clear picture of your saving and investment capacity. Move on to considering aspects, such as your appetite for risk, the investment period, and the kind of investment instruments that you may have narrowed down for the financial year. Finally, as a first timer, you can begin with investing smaller amounts for shorter durations before committing large sums of money. This activity will help you gain confidence, as well as provide you with much-needed experience.
Pro-tip: Always keep aside an emergency fund before you begin investing your income. The general rule of thumb states that your emergency fund should last you between three to six months. Hence, you should save enough money to last you between six to nine months, especially if you do not have any other source of income to fall back on.
- Select your investment instruments wisely:
Selecting the right investment instruments is vital for a successful financial plan. The financial industry has launched many services that especially cater to women. The perks of these services could be a lower interest rate on loans or a higher bracket for tax-rebate. When researching various investment instruments, do pay special attention to such relaxations.
Depending on your plans, you can opt to invest in instruments like ULIPs if you are looking for market-linked instruments to grow your wealth. If you are the breadwinner for your family, you should consider investing in a guaranteed return investment plan or guaranteed return insurance plan to safeguard your family in case of any unfortunate incident.
As a woman, you should look at creating a contingency fund using your investment portfolio because women are more likely to face work disruptions due to personal reasons, such as childbirth and child-rearing. A contingency fund will allow you to continue reaping benefits, regardless of your employment status.
- Review your portfolio periodically:
The final step in financial planning is to review your investment portfolio periodically. Most individuals wait the entire financial year or much longer to track the returns on their investment, which results in a lot of wasted time and effort. Instead, you should track your investment quarterly or half-yearly, which will enable you to make better-informed decisions timely. It is also advisable to review your investment if there is any change in your income or expenses and accordingly tweak your financial plan.
As a beginner, it would also be suggested that you seek help from a financial consultant, who can help you understand the investments better and additionally help resolve any tax issues that might come up at the time of your investment’s redemption.
Once you have educated yourself with money matters and experienced investing first-hand, you will find that one of the best investment instruments is a guaranteed return investment plan. Guaranteed return plans in India are structured for salaried individuals and offer them two-fold benefits, first in the form of insurance and the second in the form of assured returns on investment. You can check out the Edelweiss Tokio Life GCAP plan, which informs you of exactly how much you stand to gain at the end of the investment tenure.
Since time immemorial, the finances of women have been handled by the men in their life. With the steady change of women becoming financially independent, especially in urban regions, it has become crucial that they take control of their financial planning. At the onset, it may feel overwhelming, but by educating yourself about various investments and experiencing investing first-hand, you are increasing the chances of creating a successful financial plan. As a suggestion, you should begin with investing in guaranteed return plans to ensure the safety of your funds while gaining maximum benefits.
Chirag Iyer - BFSI Enthusiast
Chirag is a writer and an avid reader who loves to drink coffee! His other interests include boxing, karate, and singing