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The need for proper financial planning is to reflect on one’s finances, investments, and savings to ensure that one is on the right track with his/her financial goals. Having said that, financial planning is equally important for a woman as it is for a man.
Hence, as a woman, you need to prioritise your physical and mental health as well as your financial health. Your family depends on you and thus, you need to create a sound financial footing on which you can depend. This will ensure that you are able to weather exigencies and provide for your family when the need arises.
Note that you can take care of your family only if you first take care of yourself. Thus, you must ensure that you have a robust financial plan in place. A plan that reflects your unique risk-return capabilities and can help you meet your financial goals as well as sail through tough times.
Here are five investments that can help you build a solid financial footing;
Health Insurance: Medical emergencies and critical illnesses can become a big drain on the finances of your family. Additionally, it can also have a mental and emotional impact on you and impede your ability to take care of your family. Thus, it is absolutely imperative for you to purchase an appropriate health insurance policy that can cover you and your family members who might not be already covered by a health insurance policy. Further, you need to ensure that you purchase adequate cover so that in the event of a medical emergency, the health insurance policy can help you bridge the financial gap ensuing from the emergency.
Term Plan and Personal Accident: In addition to purchasing a health insurance policy, you must also consider purchasing a term plan. A term plan can keep your family financially secured even in your absence with a concrete safety net to meet their expenses and sustain their current lifestyle. Moreover, premiums paid towards a term plan are eligible for tax deduction u/s 80C of the Income Tax Act. A term plan provides coverage for death due to any cause, maybe natural or accident, personal accident insurance coverage provides coverage against death by accident or permanent disability arising from the accident. Ideally investing in a good term plan should be your foremost priority to financially secure the future of your family in your absence. However, if you want complete protection, then you can additionally purchase a personal accident cover. This can provide additional cover in case of disability caused by accidents.
Home / Property Insurance: While a home is made of your family, the house where you reside is your haven of protection. Thus, it is important that in addition to your life and health, you also protect your house from natural and man-made disasters. We have seen once, too often the significant impact of natural calamities on our dwellings. A home insurance policy protects your house from any damage or loss that you may incur and ensures that it does not have a big impact on you financially. Further, it can also protect you from third-party liability and often covers the important contents of your house.
Mutual Funds: This is an investment vehicle that gives you an option to invest in a host of asset classes like equity, debt, and gold as well as multiple strategies that are spread across the short-term, medium-term, and long-term. These funds are professionally managed by expert fund managers. Mutual funds can help you meet your financial goals ranging from planning to buy a house to pay for your child’s education. However, you must ensure that the mutual fund investments that you make are well-aligned with your risk-return profile. Thus, some allocation to mutual funds can help you achieve your financial goals.
PPF: Investment in a Public Provident Fund (PPF) should definitely be considered by you for inclusion in your investment portfolio. It is a relatively safer investment offered by the government of India. While PPF offers guaranteed returns, it is important to note that the rate of return on PPF investments is determined by the government every quarter and is subject to change. Historically, the rate of interest offered on a PPF investment has generally been higher than the rate of return on a fixed deposit. Contributions made to PPF are allowed for tax deduction under Section 80C of the Income Tax Act. However, this is a long-term investment option as it comes with a lock-in period of 15 years (partial withdrawals after five years are permitted for specified requirements).
by Rakesh Jain, Chief Executive Officer, Reliance General Insurance