“Should I invest in Mutual Funds after Budget 2024?”
“Where can I invest money without much taxes?”
"Top Tax Free Income and Investment Options in India 2024"
These were some of the major searches after Nirmala Seetharaman presented the budget for the year 2024-25.
Financial security in today’s fast-paced world is a necessity. This also saw significant rise in the search trends of topics like investing tips for women/mothers, how mothers can save money and where they should invest it.
Like anyone else, today’s woman wants to ensure their family’s stability and that peace of mind starts with effective financial planning. Indian mothers juggle numerous responsibilities, from managing household expenses to planning for their children’s future, which is why understanding finance becomes even more crucial.
Financial security, especially for mothers, empowers them to meet key goals, such as funding their child's education and healthcare, without unnecessary stress. It’s not just about saving money but about making informed decisions that secure your family's future.
This financial knowledge and security cam help mothers navigate through various investment options and strategies.
For the mothers who are just starting on their financial journey, this blog will give them a detailed understanding of both traditional and modern investment strategies, emerging financial trends, and practical tips for budgeting and saving.
Traditional Investment Strategies
For generations, Indian mothers have been ahead of their times, skillfully managing household finances and saving for rainy days. Their time-tested methods not only ensured their families' financial stability but also laid the groundwork for future generations.
Whether it's tucking away gold, saving extra money in the rice containers, or investing in fixed deposits, these traditional strategies have proven their worth in providing safety and growth over the long term.
Let’s explore some of these enduring investment options that continue to offer security and reliability today.
Gold
Gold has always been a prized asset in Indian households, symbolizing wealth and security. Its historical significance spans centuries, and it remains a popular investment choice due to its enduring value.
There are two primary ways to invest in gold: physical gold (such as jewelry and coins), something done for years by our mothers and grandmothers, and digital gold (which allows for buying and selling gold online without holding the physical asset). While physical gold offers the tangible satisfaction of ownership, digital gold provides ease of transaction and minimal storage hassles.
Fixed Deposits & Recurring Deposits
FDs and RDs are loved by our parents for their safety and guaranteed returns. FDs allow you to deposit a lump sum for a fixed term at a predetermined interest rate, often ranging between 3% to 7%p.a. or more depending bank to bank, offering assured returns with minimal risk.
RDs, on the other hand, involve monthly deposits into a fixed account that matures at a specified rate. This is even more popular among Indian mothers as they are often on lookout for options that allow them to save money monthly, without putting a dent on the household’s spending income.
Both options are ideal for conservative investors looking for stable growth and predictable returns. When choosing a bank, compare interest rates and terms to maximize your benefits.
Post Office Schemes
Post Office savings schemes are a time-honored way to save and invest.
These schemes include National Savings Certificates (NSC), Kisan Vikas Patra (KVP), and others, each offering various benefits such as tax savings and guaranteed returns.
NSC is known for its fixed interest rate and tax benefits, while KVP offers a lump sum after a fixed period.
Mahila Samman Savings Certificate (MSSC) is another guaranteed return scheme rolled out to help women save and invest their money in small proportions. A woman can deposit as low as Rs 1000 and as high as Rs 2 lakh at one time in the scheme for a duration of two years.
These schemes are government-backed, making them a safe choice for risk-averse investors.
Public Provident Fund (PPF)
The Public Provident Fund (PPF) is a popular long-term savings option known for its attractive interest rates and tax benefits. It functions as a reliable investment vehicle offering guaranteed returns and the flexibility of regular deposits.
Contributions to a PPF account are eligible for tax deductions under Section 80C, and the interest earned is tax-free. The account has a 15-year lock-in period, which encourages disciplined saving.
Since it is a government-supported savings account, it is open to everyone – employed, self-employed, unemployed, or even retired. Opening a PPF account is simple, and contributions can be made annually or monthly, depending on your preference.
National Pension System (NPS)
The National Pension System (NPS) is a government-sponsored pension scheme aimed at providing low cost, tax-efficient, and flexible retirement savings accounts.
It offers tax benefits on contributions and the potential for growth through a mix of equity, corporate bonds, and government securities. The flexibility in investment options and the ability to withdraw a portion of the corpus upon retirement makes it an attractive option for long-term planning.
After retirement 60% of the deposited amount can be withdrawn in a lump sum. The remaining 40% is used for purchasing an annuity (or allowance in simpler terms) from a life insurance company to earn a regular pension.
Real Estate
Investing in real estate has been a traditional strategy for wealth accumulation and security. Properties often appreciate over time, providing substantial returns on investment.
However, real estate also comes with risks such as market fluctuations and maintenance costs. This is often a good investment strategy as it provides consistent income and tax advantages. When considering property investments, factors such as location, potential rental income, etc to avoid any depreciation in property value in future. Often, with time, the interest rates rise, causing property values to decrease.
These traditional investment strategies have stood the test of time, providing mothers with a blend of security and growth through the tough times. Even in today’s world, these techniques work effectively to help people manage their finances and secure a stable future for their families.
However, as the world progresses, new forms of investments are also born, ones that give you better returns.
Modern Investment Strategies
As financial landscapes evolve day by day, today’s savvy mothers are finding innovative ways to grow their savings and investments. While traditional methods remain valuable, modern investment strategies offer new avenues for wealth accumulation and financial growth. These contemporary approaches provide flexibility and potential for high returns, fitting seamlessly into the dynamic lifestyles of today’s families. Here’s a look at some modern investment strategies that can complement and enhance your financial planning.
Mutual Funds
Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. They are categorized into three main types:
- Equity Funds: These mutual funds put money into stocks or shares of companies. They aim to grow your money significantly, but they come with higher risk because the value of stocks can go up and down a lot. They're good for people who are okay with taking some risk for potentially bigger rewards.
- Debt Funds: These mutual funds invest in safer options like bonds or loans to companies or governments. They usually provide steady, predictable returns and are less risky than equity funds. They’re suitable for those who prefer more stability and lower risk.
- Hybrid Funds: These funds mix both stocks and bonds in their investments. These types of funds aim to balance the potential for high returns with the safety of stable returns. They’re a good choice if you want a mix of growth and stability without putting all your money into one type of investment.
When selecting mutual funds, considering factors such as the fund’s historical performance, management fees, and your own investment goals and risk appetite is really important. Researching and comparing different funds can help you make informed decisions.
Moreover, apps like Groww, Zerodha, and Kuvera can help you understand these functions in a simpler manner, giving you the freedom to invest in them without worrying about the potential losses.
Systematic Investment Plans
SIPs allow investors to contribute a fixed amount regularly to a mutual fund. This is mostly done to create a disciplined investment habit for the investors who are just starting out.
The most important step to start an SIP is to choose a mutual fund that aligns with your financial goals and that way, you can set up your recurring payment through your bank.
Investing in fixed amounts gives you two major benefits; one it reduces the impact of market volatility, and second, these regular investments help grow over time through compound interests.
The lower initial investments, as opposed to the lump-sum investments, make SIPs accessible for many.
Digital Gold
Digital gold is a modern way to invest in gold without holding physical gold. Investors can purchase gold units digitally, which are backed by physical gold stored in secure vaults.
Digital gold can be bought or sold easily online, offering more flexibility as compared to physical gold. The major advantage of this is that it eliminates the need for physical storage, thus no worries over the security either.
Apart from that, since you don’t have to pay any making charges (making charges can range between 25% to 30% of the total gold value), it becomes easily accessible for small investors too.
Digital gold can be a convenient complement to physical gold investments, combining the benefits of gold’s stability with modern investment efficiency.
These are some modern investment strategies that mothers in this modern age are adopting to enhance their financial portfolios and secure their family’s future. These options provide growth, stability, and convenience, all the while offering valuable tools to achieve your financial goals.
Emerging Investment Trends
In today’s evolving financial landscape, new investment opportunities are emerging that offer innovative ways to grow your wealth. These trends cater to diverse investment preferences and risk appetites, making it easier for you to find options that align with your financial goals. Here’s a look at some of the latest investment trends that could enhance your financial strategy.
P2P Lending
Peer-to-peer lending platforms, such as 12% Club, connect individual investors directly with borrowers, without the role of any financial institutions. This model bypasses traditional banks, allowing you to lend money to individuals or small businesses in exchange for interest payments.
Also known as “social lending”, since people borrow and lend money directly from each other, the interest rates are higher, as compared to traditional savings accounts or fixed deposits.
This also provides the lender an opportunity to diversify the investments before the conventional investing options.
However, P2P lending carries risks, such as borrower defaults. On 12% Club, an RBI-approved app by BharatPe, one can earn any rate up to 12%. Below 12% returns are only possible when lots of borrowers default.
Therefore, one needs to be careful of the credibility of the platform and has to look for options to diversify their investments across different borrowers to mitigate risk.
Portfolio Management Apps
Apps like Stack Wealth and Jiraaf are revolutionizing how investors manage their portfolios.
Stack Wealth is a wealth management app that helps users save, invest, and track their money to build wealth. Stack uses algorithms and human-guided insights to manage and rebalance your investments based on your goals and risk tolerance.
Jiraaf is another investment platform that can help you invest in a diversified portfolio of digital assets, offering them a simple, convenient, and secure way to access the world of digital investing.
These platforms provide up-to-date information on the investments, as well as some apps offer access to financial experts and advisors to help with investment strategies. This is particularly useful for busy parents who want to efficiently manage their investments without spending too much time.
Startup Investments
Investing in startups offers the potential for high returns if the company becomes successful. This type of investment involves providing capital to new or early-stage companies in exchange for equity or ownership shares.
The high-risk, high-reward situation with startups can offer significant returns, but with the risks it comes with, as many startups do not succeed.
But to make decisions to invest in startups, one needs to evaluate the startup’s business model, market potential, and even the management team before investing. Looking for detailed business plans, and financial projections might give a clear path to profitability. Investing in startups can be an exciting way to be part of innovative ventures, but it requires careful research and a tolerance for higher risk.
These emerging investment trends offer modern alternatives to traditional methods, providing opportunities for growth and diversification. By exploring these options, you can enhance your investment strategy and potentially achieve greater financial success. As always, it’s crucial to do thorough research and consider your own risk tolerance before diving into new investment avenues.
Budgeting and Saving Tips
Creating a budget and saving money are crucial steps toward achieving financial security for a family.
Indian moms have traditionally saved money that came into use on a rainy day and one just can not ignore their tips and tricks.
Here are some practical tips to help you manage your finances effectively:
Monthly Budget
An effective household budget can help you track your income and expenses. It also helps ensure that you live within your means. Here’s how to create one:
- List All Sources of Income: Include your salary, spouse’s income, and any other earnings in the household.
- Track Expenses: You can start your month by categorizing your spending into fixed expenses (rent, utilities, etc) and variable expenses (groceries, entertainment, food, etc).
- Set Priorities: Determine which expenses are essential and which are optional.
- Allocate Funds: Assign a specific amount for each category, ensuring essential expenses are covered first and you have enough as savings too.
- Monitor and Adjust: Regularly review your budget and adjust it as needed to accommodate changes in income or expenses.
Saving Strategies
Effective saving strategies can help you build a financial cushion for unexpected expenses and future goals. Generally, it is suggested to save anywhere between 3-6 months of fixed expenses as your emergency fund.
Here are some saving strategies you can use:
- Automate Savings: Set up automatic transfers to your savings account each month to ensure consistent saving and avoid splurging.
- Cut Unnecessary Expenses: Review your spending habits and identify areas where you can cut back, such as dining out, or subscription services.
- Use Discounts and Coupons: Take advantage of discounts, cashback offers, and coupons to save on your everyday purchases.
- Set Financial Goals: Define short-term and long-term financial goals, such as a family vacation or a child’s education fund, and save towards them. Make sure to keep those funds separate and don’t give into your urge to overspend.
- Emergency Fund: Maintain an emergency fund with at least 3-6 months’ worth of living expenses to cover unexpected costs.
Others
The Indian government also offers various schemes designed to support mothers and children. Here’s an overview of some relevant programs:
- Pradhan Mantri Matru Vandana Yojana (PMMVY): This scheme by the Indian government provides financial assistance to pregnant and lactating mothers for their first live birth. Eligible mothers receive a cash incentive of ₹5,000 in three installments.
- Sukanya Samriddhi Yojana (SSY): This is a savings scheme specifically for the girl child, offering attractive interest rates and tax benefits. Parents can open an account in their daughter’s name and make deposits until she turns 15.
- Balika Samridhi Yojana: This Balika scheme provides financial assistance to families with girl children. Some of the benefits include a post-birth grant and annual scholarships to encourage the education of girls.
These budgeting and saving tips, along with leveraging government schemes, can help you manage your finances more effectively and secure a better future for your family. By taking small, consistent steps, you can build a solid financial foundation and achieve your financial goals.
Adopting smart budgeting practices and then exploring both traditional and modern investment strategies can help you create a strong financial foundation for your family.
It is best to leverage government schemes designed for mothers and children to further enhance your financial security. These steps not only ensure stability but also empower you to confidently plan for your family’s future.
Remember, every small effort in managing your finances contributes to achieving your larger financial goals. Start today, and watch your financial wealth multiply over time.