We have come a long way from when a man was anticipated to be the breadwinner and the sole earner in the family. During these horrible phase, a woman was expected to stay at home and do her sole work – look after the household. Today, women and men are economically and socially equal. The demographics of a female have swiftly transformed in the last few decades. Women are now a protruding part of any global and corporate business landscape. Today, more women are taking active charge in managing business finances and being financially independent. This article aims to provide a few healthy mutual fund investment tips that every prospective woman investor must be aware of.

Step 1 – Recognise and prioritise your financial objectives

Before you begin to invest in mutual funds, make sure to recognize and prioritise your goals. To ensure better direction and success for your mutual fund investments, try to link your investments to specific financial goals. For a woman, financial objectives may vary basis her age, marital status, number of dependents, financial situation, etc. For instance, for an unmarried woman it might be more important to create a corpus for her wedding. On the other hand, for a mother, investing for her child’s higher studies would be a priority.

Step 2 – Try to avoid choosing a fund based on the NAV

NAV stands of net asset value. It refers to the funds market value on any particular day. While choosing a mutual fund, several investors get carried away by low NAVs, as it cheaper than mutual funds that are priced at higher NAV. NAV is directly proportional to the AUM (asset under management) and the total units of the fund. For example, if you invest Rs 5000 in two different funds with NAV of Rs 10 (A) and Rs 50 (B) respectively. The different NAV values imply that you hold 500 units of A and 100 units of B, total value being the same, i.e. Rs 5,000. So, whether the NAV is high or low is only a indicator of the number of units an individual would hold and not the performance of the fund. Instead, look at the returns of the fund over different time periods and then compare it to the benchmark and their peers.

Step 3 – Choose the mode of investment

As an investor, you can invest in mutual funds either via SIP way, i.e. Systematic Investment Plan or the lumpsum mode. Both investment modes have their own sets of pros and cons. An SIP investment helps to invest an insignificant amount in regular funds. On the other hand, a lumpsum in mutual funds means that you invest the entire investment amount in one go. Lumpsum investment or SIP investment, choose the one that better suits your profile.

Step 4 – Review your portfolio regularly

Your financial portfolio is a roadmap to achieve your financial objectives. Make sure to review them regularly and make necessary changes if your goals change along the way. You might consider to redeem them for better performing mutual funds if they have been constantly under-performing for a long time.

Realise the importance of investing and begin your investment journey as soon as possible. You can also take the services of a financial advisor to guide you with your investment journey. Happy investing!

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March 2021