Financial independence for women is key to their empowerment, a vital part of which is better saving and investment planning. If not planned in advance, one can often be in distress, especially when they require large sums of money. While women have been traditionally associated with investing in physical gold, with changing times more and more women are choosing to invest in long-term goals. It’s not only a great sign for individuals, but also for the economy as a whole as more money is being circulated in the market than being kept idle at home.
To help you choose better, here are some great long-term investment options for women:
1. PPF or NPS
Saving for retirement is always the primary long-term goal. And even though your company may have a PF fund allocated to you for each year, it is advisable to get additional retirement/pensions plans into play. Opt for PPF or NPS, or even both if you deem necessary. While PPF has a lock-in period of minimum 15 years, NPS investors have to wait for at least 10 years before they can withdraw some portion of the fund. Both also offer good tax exemption opportunities under Section 80C, and for NPS an additional exemption for up to Rs 50,000 can be claimed under Section 80CCD (1B).
Real estate is always a good long-term investment, especially for women for whom most banks offer lower rates than men when availing a home loan. Most banks offer home loans to women at anywhere between 0.25 and 0.50% less than male applicants, and some give benefits of flexible payment structure. What’s more is that you can also save tax by declaring the principal repayment under 80C for a maximum of Rs 1,50,000 and the interest repayment under Section 24B of maximum of Rs 2 lakh in case of a self-occupied house. In case the house is in the joint name of your spouse and you (joint loan), each one can avail of Rs 2 lakh interest component deduction in order of the proportion of loan taken.
3. Mutual Funds
Investing in mutual funds is suitable for those with an appetite for moderate to high-risk. Under these there are various categories to choose from — Liquid, Equity, Debt, Hybrid. If you are a new investor you can start with something less risky like liquid funds, and slowly move on to others.
ELSS funds are a great option as they not only help you create wealth but also give you tax benefit under Section 80C. While all mutual-funds are not considered long-term investments, ELSS needs to be held for a minimum of 3 years, and for good returns should ideally be held anywhere between 5 and 7 years, thus giving you a good corpus by the time you decide to sell it. That corpus can then be invested as a lump sum investment elsewhere. Do remember though that an LTCG tax of 10% will be applicable of gains above Rs 100,000 in a year for ELSS investments.
4. Health Insurance
Health is wealth of course, and more so for women who need to take care of their well-being at a time when environmental hazards pose a risk to their health. The smartest thing to do is to invest in yourself by investing in a health insurance, which will take care of your medical needs and you won’t need to shell you from your savings for the same. While you may already be covered in a family floater plan by a member of your family, or in a corporate plan by your employer, it’s wise to get an individual policy and have ample cover for emergencies. Plus, you can claim tax benefit for the same for up to Rs 25,000 a year under Section 80D.
5. Life Insurance
It is often assumed that men should take out life insurance policies in order to secure their family’s future. But if you have kids or dependents, it is as wise for a female member to invest in a term plan as it is more males. The earlier you take a life insurance policy, the lower the premium remains compared to the large amount being assured. Once again you can add this investment to your tax-saving list to claim benefits under Section 80C.
(The author is CEO at Bankbazaar.com)