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What Every Mom Needs to Know About Investing

  • Highlights

  • Start investing as early as you can

  • Being debt-free before you start investing

  • Over-save and under-spend for retirement

  • Setting your financial goals

The idea of investing tends to intimidate the most prudent of investors. However, understanding investments is easier than it seems. It is essentially a method of making your money work for you.

Bajaj Finserv Fixed Deposit

To make the most of your investments, you can educate yourself about the different investment options you have. You can start by educating yourself on the differences between mutual funds, stocks, bonds, Public Provident Funds (PPF), etc. You don’t have to be an expert, but having a general idea is enough to become a good investor.

As a mother, you can use the following tips to improve your investments and gain better returns.

Start as Early as You Can

With investing, the earlier you start the better, thanks to the power of compounding. While starting in your early twenties may not always be possible, especially if you have debt to pay off, you can start as soon as possible.

Make efforts to live well on a budget, and start a contingency fund. The fund should be tapped into only in case of dire emergencies, and should ideally be equal to your three to six months’ salary. Fixed deposits are good investment avenues to park your funds for emergencies.

Additional Read: 5 Reasons That Prove Fixed Deposits Are the Best Form of Investment

Be Debt Free Before You Start Investing

This one is simple. You need to have paid off all your debt before you can really start investing.

For example, if you are a young mother, you may have student loans, or even car loans, or credit card debts to pay off. You need to pay these off before investing, because if, say, you’re earning only 3% on your investments, but paying 6% interest on your debt, you’re not gaining any money- in fact you’re losing money.

Additional Read: Best Saving Schemes in India

Set Your Financial Goals

Setting your financial goals before you start investing is essential. You may have varied goals, like your children’s education and marriage, a new house/ car, your retirement, etc. Setting these goals with your spouse will give you both a clear idea of what you need to save and invest for.

According to the need, you can invest in whichever of the investment options that will serve you best for each goal. For example, mutual funds are a good option for both retirement and your child’s marriage and education.

Over-Save And Under-spend For Retirement

You need to put at least 15-20% of your salary into a retirement fund to retire with a comfortable nest egg. However, if you have a career break during motherhood, there may be a break in the savings. In such a scenario, you can try working part-time or as a freelancer/ consultant, to have a little bit of income.

The returns from the retirement fund is tax free, when withdrawn after retirement. Moreover, every little bit of saving you do will help. Thus, it is a good idea to avoid any absolutely unnecessary spending as well.

With financial freedom, you have the option to do whatever you want. You can take of yourself, your family and even provide for other people. Use these tips to achieve that freedom!

DISCLAIMER: The mentioned fixed deposit interest rates are indicative only, and may be subject to change periodically. Please check the interest rates on our website.

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