Single mothers should learn the basics of investing

Get a good investment advisor to put in place a robust financial plan with a term life insurance and a medical insurance for the whole family
Ask any financial planner, and he/she will tell you that women prefer to keep themselves away from finance and investments. This, despite women having a very strong natural instinct for budgeting and also a better sense of what all are required for the family, in the present and also in the future, compared to their male members in the family .This attitude of women__to not involve themselves into matters relating to finance and investing__often turns out to be a monumental problem if they lose they are forced to live on their own, for whatever reasons. Their move to having a life on their own faces more hurdles if they have children with them and they have to secure the financial future of all of them with almost no knowledge about finance and investing, financial planners say .

According to Sanjeev Govila, CEO, Hum Fauji Initiatives, most women who face such situations have never handled large amount of money . “To top it, Indian families, including the women themselves, have a mind-set that handling money is the job of a man. This could be to the extent that they may not even be clear about normal financial transactions like operating a bank account or basic accounts of own financial dealings,“ he said.

Govila, who works with people from the defence forces, said that most women in such situations get scared with the idea of handling money and remain indecisive for a long time, lest they invest it wrongly. “They prefer to turn to their friends and relatives even if they do not have much faith in the financial skills of those who are being trusted. There is a trust deficit in financial advisors and women are either wary of approaching them or do not know who can help them out,“ he said.

According to Mrin Agrawal, co-founder, Womantra, although single mothers should be equally responsible for the all the important financial goals in their life, often women are found to focus more about their children’s education and other needs, and either neglect or totally forget to work on a financial plan for their own retirement. “A well thought out financial plan, a term plan for self and medical in surance for the family should be the top priorities for single mothers,“ Agar mothers,“ Agarwal, whose firm educates only women about investing and finance, said. She is also against women delegating financial planning and all their investment-related works to their relatives.

When a woman is beginning her journey as a single parent after losing her husband for some reason, the three common problems she faces are lack of knowledge about how to survive, how her husband was earning money and how he had invested the money, said Vinita Baraya, a Jaipur based wealth manager and financial planner. In such a situation, the first step is to take care of the funds that she gets from the insurance or as compensation. “She should put the money in a liquid fund of a good fund house, which is relatively safe and also offers easy liquidity, and then start learning the basics of investing,“ said Baraya, one of the most experienced woman financial planners in Rajasthan. “Slowly they need to learn about sources of income, expenditures, savings, investments and financial liabilities,“ she said. In case of a separation between wife and husband, the changes related to financial and investing matters are change of holding pattern from joint to single, changes of electronic clearing instructions to bank accounts, opening of a new demat account to transfer shares, changes to details in mutual fund investments, etc.

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*Photo credit: Times Of India

Source:  Article in Times Of India on Mar 08, 2016

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