As a millennial woman, shore up your finances this Women’s Day

Imagine your money as a vehicle and your investments as the roads leading to your financial goals.

Your choices shape the path ahead – whether it’s straight or curvy, flat or bumpy – and the speed limit you must drive under.

In India, we’re proud of our demographics especially with the vibrant millennial population, with around 34% falling into the Gen Y category – individuals aged 28 to 43. The women in this age group today are dynamic, confident, empowered, and breaking every stereotype.

This Women’s Day is a powerful call to action for millennial women. It’s an opportunity to take control of our financial futures and to start building wealth for the life we envision. Let’s seize this moment to shore up our finances, paving the way for a brighter tomorrow.

Let us understand the essentials of investing and what are the key points one needs to keep in mind to build wealth over long-term -

What is your key investment objective?

First of all, you need to understand why you are investing and what objective you want to achieve – every person may be in a different situation and, hence, if your friend is investing in something that may or may not suit you.

We can’t have the concept of One-Size-fits-All investing as cash-flow requirements may differ from individual to individual.

There could be many ways in which you can start this – for e.g you can have a bucketing approach where you keep three buckets:

(1) Safety Pot – safe, liquid investments which provide steady returns and low volatility

(2) Core Portfolio – build your long-term core investment portfolio with a balanced risk-return

trade-off and an ideal investment horizon of at least 3 years

(3) Satellite Portfolio – this could be through opportunistic ideas with high risk-high return

strategies – however, this comes with illiquidity and needs a long-term holding

Once this roadmap is in place, you can begin your investing journey in accordance with your risk profile – which can be conservative, balanced, or aggressive.

Set up your Investment Charter: An Investment Charter or an Investment Policy Framework is the most important element and the bedrock of successful investing.

This document serves as a Strategic Guide to the planning and implementing an investment program. This document defines the guardrails of do’s and don’ts related to the governance of the investment portfolio.

This would help you to bring discipline to your portfolio, and it will not be skewed to one single asset class, a single manager or a single security.

This also helps you take a Portfolio Approach rather than a Product Approach, which is the real mantra for successful investing.

Asset-Allocation – Not everything does well all the time:

We have seen different asset classes behaving differently at different times, and one single asset class may not be the best-performing asset class at all points in time.

Hence, having an asset-allocation and diversification approach to your investments will help you mitigate risk as you embark on your financial journey.

Most studies have shown that Asset-Allocation contributes over 90% of portfolio performance.

Most of us spend more time and energy in timing the market and buying the right product/stock, but the actual long-term returns are made from asset allocation, and that is the key, which all investors need to keep in mind.

Portfolio Review:

Reviewing your portfolio at a regular interval is equally important. We normally spend a lot of time creating a portfolio for us and are very careful when we are investing - but once the portfolio is created and not reviewed, it can give surprises in today’s time when things are so dynamic.

Portfolio Review should not be confused with Portfolio Churn

A review helps you see how the portfolio is positioned and if there is any need to take corrective action.

Professional Advice:

Investing is a discipline and should be based on financial planning. While all the above points would be handy, one should have a professional and trusted advisor. The investment advisor can help you frame your investment objectives, set up your investment charter and guide you towards building your portfolio with periodic reviews.

As a millennial woman, you’re blessed with incredible opportunities, and with these financial prudence strategies at hand, you’ll be equipped to seize them with confidence and purpose.

Embrace the journey ahead, knowing that your diligence and foresight will pave the way for a future filled with prosperity and fulfillment.

Happy investing, and may your endeavors bring you joy and abundance!

(The author, Rama Biyani is Senior EVP, Key Clients Group, 360 ONE Wealth)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)