The Woman’s Guide To Investing In Equities

The future is female. Especially the financial future. According to data made available in 2022 as per a report in the Economic Times, the proportion of women investing in equities in India rose from 16 per cent to 24 per cent in just two years. Along with women in urban India, those from Tier 2 and Tier 3 towns are also looking towards stocks and mutual funds as investment options. But despite increasing numbers, there is still a long way to go. Women have a low appetite for risk and stick to conventional options for their investments. Stocks and SIPs are still perceived as a scary proposition and an adventure that is not for the faint-hearted! But if you do want to explore it, here’s a beginner’s guide to give you all the information you need. 

What are equities? Says Rajesh Shah, Director – Private Banking in a leading private sector bank, “When a company wants public money for their growth, it asks people to buy a stake and distributes shares in lieu of that. So, you invest and become part-owner of the company. Whenever the business grows, the investor will benefit from the share price and dividends. To put it simply, owning equities is like owning a percentage of the company.”

What is a Demat Account? When you open a bank account, you do so to park your money in it. “A Demat is something like a bank account, but this is to park your stock in a company in an electronic form,” says Shah. “NSDL or CDSL run this facility and they are both government-registered share depositories. A Demat account can be opened with your current bank. Most banks offer a three-in-one account - your bank account, your trading account (useful to buy stocks), and a Demat account to park the stocks.”

Interestingly, the number of Demat accounts in India has increased from ₹4.1 crores in March 2020 to ₹8.97 crores in March 2022. According to a Reuter’s poll, Indian stocks are all set to rise by 9 percent by end-2023, despite the slowing economy.

How can I start investing? The first step is to educate yourself. Malati Reddy, a Hyderabad-based veterinarian was sceptical about being able to manage her funds and stock portfolio. “Finances overwhelm me, so I was happy with earning, spending, and putting whatever I saved into FDs or RDs. But I wasn’t really able to grow my savings significantly. So I educated myself. I started small, by investing ₹10,000 every month in two SIPs. After a year I started purchasing stock in a few companies as advised by my banker – small amounts that I knew I could afford to lose in a worst-case scenario (although that certainly wasn’t the goal!). It’s been around three years since then, and today I’m more comfortable making decisions, investing larger sums of money, and playing the waiting game till stocks hit an all-time high.”

While female investors were on the rise starting from the mid-2010s, it was the COVID-19 pandemic that really accelerated things. Women didn’t just become ‘savers’. They became investors, who adopted technology, grew their emergency funds, and approached their portfolios with intent, thoughtfulness, and discipline. However, we’re late bloomers. As per data collected from Kuvera, an online wealth management platform, the average age of a male investor in India is 33, while the average age of a woman investor is 37.

How do I go about educating myself?  Says Shah, “Everybody wants to become a billionaire by investing in stocks. When you buy a property, you’re ready to park it for 20 years. But when it comes to stocks, everyone wants to buy today, sell tomorrow and make money. Old-school women can read the Economic Times or Business Standard regularly, to understand the market. Otherwise, tools like Moneycontrol.com offer information online on financial markets and international markets. This makes it easy for women to decide where they want to park their money. You can start a monthly SIP, for say ₹5,000 or ₹10,000, after checking out the top five funds to invest in. If you want to invest in stocks directly, read up on your own. With women, I always hear that they want to invest because a friend recommended it or their husband suggested it. Listen to people you trust, but you should be your own authority with a basic understanding of the market. When you invest in a home, you would look at various aspects – the location, builder, design, price and so on. Look at stocks the same way. Understand the basic names and start with those you recognise. For instance, Reliance Industries or HDFC Bank are well-known and safe bets, to begin with. Start with the basics.”

What are the risks? Although we have made strides, Indian women investors are still far below the global average. Even though we are the sixth biggest equity market in the world. Part of the reason is that the stock market is viewed as ‘risky business’, as opposed to the safe haven we are all conditioned into seeking. Shah maintains that rather than viewing the stock market as a high-risk proposition, one has to view it as a best-return proposition. “Making money is different from creating wealth. Wealth creation happens over a decade. Look at a long-term plan of at least three years to 10 years. Risk appetite is very different for every individual. Do your basic homework and invest in a stock that is very liquid – a stock that you know will bounce back even if it goes down. I reiterate, invest in what you know and what you’ve heard of. It’s a myth that Indian men are better money managers than women. In fact, Indian women have the best money management skills. Generations of successful homemakers are proof of this.” 

To cut a long story short, all you need to do is a little bit of reading and research, use your own instincts and skills, and exercise your autonomy. You’ll be all set to grow wings and take flight into the rewarding world of equities.