By Rashmi Roddam, Director – WealthRays Securities Pvt. Ltd.
What comes to your mind when you hear the words Dal Chaawal (for me, the real taste of India)? The image those words conjure up in my mind is that of a lady in front of a stove with her hair tied up, vapors wafting about her, putting some tadka to cooked dal (lentils). Over years, she has learnt exactly how much salt and spice is required for the quantity of dal she prepares for her family. But what about the very first time that she cooked? She was ready to take a chance and do the best for herself and her family. Can she take such a risk when it comes to investments?
Investments by women are mostly into fixed/recurring deposits, gold, chits through jewelers (indirectly investing in gold) or family driven chit funds, and real estate. Equities rarely come into the picture as far as investments by women are concerned. Though they might invest in mutual funds (thus indirectly investing in stocks), most women are still skeptical when it comes to investing in stocks through exchanges such as the Bombay Stock Exchange(fondly called Dalal street, where it is situated). Investing in shares is considered to be risky, a perception cemented through stories of countless people who burnt their fingers in their hurry to make instant money. But women believe in stability- the mentality that is best suited for equity investments. They are more decisive and stick on to their decision, once taken.
In urban India, exposure to investment avenues are high for women who want to be able to take care of rising expenses and be financially sound and independent. With interest on bank deposits hovering around 8 to 10% p.a. for past 5 years and with increase in expenses, it is hard to earn and save enough through fixed deposits to achieve financial goals. Real estate investments are not liquid in nature, and thus are unsuitable for short term investments. This is where equity investments are helpful- even small monthly equity investments can fetch enough returns to beat the inflation. Hard to believe? An investment of Rs.10,000/- in Wipro shares 20 years ago would have grown to more than Rs.365 Crore today due to bonus, dividends and appreciation in share price!
Let us take a look at how one can start investing in equities and what are its benefits:
1. Open a Trading and Demat account – For buying and selling of shares, one should have a computer with internet connection or a phone. Select a stock broker to open demat and trading account. Trading account is the account through which you will be able to buy and sell shares. Demat account is where your shares are stored. If you have a computer with internet connection, you can invest in shares on your own; otherwise you can call your broker to place your orders. Ensure that you track your buy and sell orders on your own.
2. Know the charges applicable : Choosing a broker is crucial if you are looking to trade frequently. Brokerage is the major cost that you would incur on shares apart from taxes like securities transaction tax (STT) and stamp duty.
3. Tax benefit on shares: You can claim tax benefit under 80CCG (for first time investor) in case you fall under tax slab. Capital gains on sale of shares after 1 year from the date of investment, and returns that you earn are completely tax free. If you choose to invest in mutual funds wherein you indirectly invest in share, you can claim tax benefit under section 80C.
4. Earn profits and dividends: You would earn on increase in share price and also dividends declared by the company. If a company is making profits for the year, it usually declares dividends to shareholders which will be directly credited to your bank account and it is tax free.
5. Earn from home: You can track your stocks sitting at home as prices are displayed on all business channels. You can earn even while cooking dal chaawal!
6. Follow disciplined and diversified investment: One of the main reasons why people lose money in stock markets is that they make lump-sum investments and wait for a miracle to happen overnight. Do not invest your entire savings in one stock. Diversify your investment into different sectors and invest on a monthly basis to earn more.
7. Be aware of the risk: Shares do not provide a fixed return, prices are subject to market fluctuations. Study the stock for few days and then invest in it.
8. Ask experts before investing: If you are not comfortable in taking your decisions on a stock, do consult an expert who would provide you suggestions on stocks you could invest for short, medium and long term purpose.
Though equity investments are getting more visibility amongst urban working women, home-makers and women in rural areas are still averse to or do not know about equities as an investment avenue. As our first prime minister Pandit Jawaharlal Nehru rightly stated, “To awake the people, it is THE WOMAN who must be awakened, once she is on the move, the family moves, the village moves and the nation moves”. So women and young ladies, let us show the world that not only can we make dal chaawal, but we can rule Dalal Street too.