The origins of Mother's Day across the world are still subject to varying interpretations. But what is now official is that exactly 103 years ago in the year 1914 the American President, Woodrow Wilson, declared that the second Sunday of May each year will be a national holiday in celebration of the contribution of Mothers to society. That practice was soon adopted across large parts of the world and from then on the second Sunday of May has been celebrated as International Mother 's Day each year.
Each year you obviously plan your mother's day gifts well in advance. But the real gift that most mothers require in India today is good and solid investment advice. Most mothers tend to spend an inordinate amount of time catering to the needs of the family. So much so, that they at times tend to forget the need to provide for their own financial future. This is irrespective of whether the woman is a working women or a housewife. This Mother's Day try to identify 5 women around you in different age groups and income matrices and try to talk them into the need to invest for the future. It could be your mother, your sister or even your wife. Every mother has the right to be better informed about investment options.
1. If she is a young newly married mother and also working.
If she is young and working, she not only earns income but also has a fairly long working career of another 25-30 years ahead of her. What should be her financial priorities? If her spouse has taken care of the insurance aspect, she can take the risk to focus more on wealth creation. Advise her to get into equity mutual funds. Better still, she can opt for ELSS (Equity Linked Savings Schemes) of mutual funds. This will be like hitting two birds with one stone. Since she is working, this will take care of her tax requirements under Section 80C. At the same time, it will also take care of creating wealth in the long run. Remember, the power of compounding works much better in case of ELSS due to the compulsory lock-in of 3 years.
2. If she is a young married housewife
Most women, even career professionals, are forced to spend few years at home when the kids are growing up. Does she have to give up investments altogether at this point of time? Not exactly! Firstly, investment in most families tends to be a man-affair. The mother of the family needs to get a little more involved in the activity. These mothers can take the responsibility for investing on behalf of the family. Most Indian housewives are extremely good at chipping away by cutting minor expenses. In the process they end up saving a tidy sum. Unfortunately, most of the money is stashed away in piggy banks or under the pillow for a rainy day. The result is that this money hardly earnings anything. If she has accumulated a tidy sum, she can look at options like Post Office Recurring Deposits or even debt/liquid funds to earn that higher return on idle funds. Of course, a little portion for liquidity is understandable.
3. If the mother is middle aged with grown up children
Does a middle-aged mother with grown up children have to worry about investments. In fact, all the more, she has to. If she is earning and she also has grown up kids there is a lot she can do. For starters, she can contribute to the kitty for her children 's education and marriage by starting off systematic investment plans on their behalf. A middle aged mother also needs to seriously make alternate plans for her own future. She should look towards long term SIPs that can take care of her own sunset years. While it is the norm in countries like India to leave the financial planning part to their spouses, it is extremely important for mothers to take their financial future into their own hands.
4. If the mother is nearing 60s and wants to lead a peaceful life..
That is the million dollar question! At the age of 60, does she still have to worry about investments? The answer is yes. There are a few basic rules here. If she is getting a pension, she need not keep all her money in the bank account. If she has been a working mother then she will surely end up with a decent corpus post retirement. The onus is on her to ensure that the money is put to good use. Instead of letting the money idle in a bank account, she should just keep a small portion of money for her regular expenses and contingency in the bank. The rest should be converted into a systematic transfer plan (STP). She can put her entire corpus in a liquid or short term debt fund and then sweep a fixed amount into equity SIPs each month. The money in the liquid fund can be anyways liquidated at a notice of less than 24 hours. The additional returns on the liquid/short term debt fund can be used to meet her additional gifting commitments towards her children. Her money that becomes an equity-SIP gets the benefit of rupee cost averaging and creates wealth over the medium term.
On the occasion of Mother's Day, the one gift that we need to give the mothers is the power and knowledge to invest. Let us empower mothers in the best way possible; that is the financial independence way!
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