International Women’s Day is a momentous occasion that celebrates how far women have come, on a global basis, while also shedding light on the various aspects where change is imperative and inevitable. For 2023, the theme for Women’s Day is #EmbraceEquity, and while the theme focuses on equity in every sphere of life, it can also be considered a call for women everywhere to get on to the equity bandwagon when it comes to the investing landscape. Equity or the stock market is a core part of the financial world and a must-have, if you are keen on financial freedom.
Through the past few decades, women have made their presence felt in the investing landscape, taking control of their financial well-being in an increasingly confident manner. However, women’s innate thoughtfulness and comparative unwillingness to take on incremental risk have prompted them to stay on the sidelines of the volatile equity market. However, this Women’s Day is a call to action for women, because equity is not just a nice-to-have – rather, it is the firepower capable of catapulting your portfolio into the major league.
Importance of Equity Investing
While it is true that the debt part of the market is a more stable option, there is no denying the importance of equities. Investing in equities is an excellent way for you to enhance the value of your principal, in a sustainable manner, especially in the longer term. Historically, equities have offered higher returns than the debt market and other investment options like fixed deposits, making it a superlative means to combat rising inflation. Further, when you invest in equities, you enjoy the ability to participate in the growth of the underlying company and the larger economy.
For instance, throughout your life, you would have purchased pharmaceutical products such as cough syrups and painkillers. Should you not be a part of the momentum you have created? By investing in fundamentally strong pharmaceutical stocks, you may well have the ability to partake in the growth of the business, something you, as an individual, are already contributing to. Equity investing also ensures flexibility and liquidity, since you have the option of redeeming your stocks at a moment’s notice, making it a win-win solution for women keen on ensuring financial well-being and robust portfolio growth.
Steps to Embrace Equity
So how should you, as a new-age woman, embrace equity? You can follow these steps and slowly build exposure to this burgeoning asset class:
1. Gaining awareness: One of the biggest reasons why women shirk away from equities is due to a lack of knowledge. This is the right time for you to start researching and understanding the stock market, and you can consider options like online resources, investment courses or contacting a financial advisor to build awareness.
2. Knowing your investor profile: Every investor is different and, to arrive at your unique investor profile, you need to analyse metrics such as your risk appetite, return requirements, time horizon and investment goals.
3. Finalising your budget: Equities are volatile in nature and are inherently risky. Before investing, decide on the amount of money you wish to park in equities, as this will enable you to stay within your means.
4. Choosing the right option: You can embrace equity in one of two major ways – directly investing in stocks or via equity mutual funds. Your decision should be based on your risk appetite and understanding of the market. It is advisable to opt for equity funds if you are a novice since your funds would be managed by a professional fund manager capable of taking the right decisions.
5. Picking the right category: Once you decide on the route of investment, you should decide on the best category for your needs. If you are a risk-averse investor keen on stable returns, you can invest in large-cap funds or stocks, as this refers to fundamentally strong companies with a proven track record. Alternatively, if you are keen on robust growth and high returns, and do not mind high risk, you can go with small-cap funds or hybrid funds.
6. Staying rational: As an investor, you cannot let your emotions overwhelm you, because feelings of fear or greed could be the reason behind costly mistakes. Take rational and logical decisions to ensure the best outcomes.
With these steps in mind, you can embark on your #EmbraceEquity journey in a confident manner and arrive at a portfolio primed for success.