Indian Women Traders In Stock Market
Indian women are emerging as new leaders in the world. Then why do we see fewer women trading in stock markets?
Women are generally well known for their inherent skills at money management. They always show their expertise while managing their domestic accounts, hence with basic minimal knowledge they are equally capable of showing their intrinsic ability in Stock markets as well.
● Stock markets are no longer only for bankers and traders. Any person, including a housewife who knows the basic business understanding on the basis of consumer behaviour combined with analytical skills, can generate profits.
● When risk is understood more broadly, women seem as likely as men to take risks like investing in stock markets.
At the end of the day, it is financial knowledge that counts. If the right financial education was imparted to more women at school and college levels, the differences in the gender in risk-tolerance disappears. Frankly, women can be the best judge of investing in the market if they apply basic common sense.
Why stock market?
The high cost of living in modern society has put the family in the position where both adults are required to contribute in some or the other way. And with required knowledge and guidance stock markets can contribute to oneʼs livelihood.
One does not need to know all of the technical details to buy and sell stocks; however, it is important to have a basic understanding of how the market dynamic works.
When one buys stock, one is buying a piece of a company and becomes a part owner. This ownership gives certain rights; including voting on important matters before the company and participating in the profits if the company distributes dividends. When one owns stock, one is participating in the growth of the company. As the value of the company increases, so do oneʼs investments. If profits increase, one receives bigger dividends.
What’s the difference between buying a lottery ticket and buying a stock?
In the first case, you help finance the local community swimming pool. In the second case, you help finance the stock promoters’ home pool.
Women and stock analysis What are “blue chip companies”? Ultimately, all of us end up buying products or goods that are manufactured by companies that are listed in the stock market. Since morning to evening we use every day different types of products (example toothpaste, clothes, food items, cars and so on (forth) for different purposes serving different needs. While buying such products, it is easier to find the name of the manufacturer which we normally donʼt look at.
● It is interesting to have an observation on the behaviour of the consumer which I highlighted earlier.
● We as women many a time drive the sales of products of companies manufacturing them and bring it to consumers like ourselves. However, we never realise such companies are investment worthy. Does it not look simple for us to get our insight on choosing companies to invest?
● Peter Lynch, a globally renowned investor became a popular value investor purely on the basis of consumer behavior. Is it not interesting?
What is a DMAT account?
In India, shares and securities are held electronically in a dematerialised or DMAT form.
The dematerialised account number is quoted for all transactions to enable electronic settlements of trades to take place. Many banks give DMAT accounts at NIL charges but an annual maintenance fee is levied which is around INR 750 for the first year and reduces as the number of usage years increases. DMAT account can be opened in banks with the following documents: I. PAN card – this is a mandatory requirement. If one does not have a PAN card, one can apply through NSDL’s official site . II. Address proof – One may submit a copy of oneʼs passport/ voter ID card/ration card/driving licence/telephone bill/electricity bill. A stockbroker was filling out a job application when he came to the question: “Have you ever been arrested?” He answered no to the question. The next question, intended for those who answered the preceding question with a yes, was “Why?” Nevertheless, the stockbroker answered it. “Never go Caught”.
Indian women and their investments philosophy
All of us have seen Indian womenʼs love for gold; they accumulate it as savings for their childrenʼs weddings and emergency funds. But many of our nation’s women are not aware that the gold can also be bought and sold like any other share in the stock market without getting any making or wastage charges deducted. And also there is no physical delivery of gold involved, hence safety is assured. Gold shares in the form of ETS’s are credited to one’s DMAT account.
Investing for a long term should be the strategy for women to play safe at the Beginners level. At this stage the aim is to build and protect wealth. Hence one is called Investor whereas a trader is a person who speculates in the market to make short-term gains. A trader aims for quick profit-making. Investors hold their stocks at least for one year and stay invested for a decent gain as well as to receive benefit from the companyʼs growth. Long-term investors understand that investing is a process that seldom is conce rned with whether the stock market is up or down on any given day. Initially women can start allocating 25-30 per cent of their monthly savings into stocks and once they become familiar with the market they can increase the equity exposure.
GOLD ETF – 40 per cent STOCKS INVESTMENTS – 30 per cent
SAVINGS IN BANKS – 30 percent
In addition to common-sense principle, the skills required for an investor are:
skills for an investor
● Understanding a company’s
● Ability to read simple financial statements like balance sheet, P&L statement and cash flow statement
● Simple financial ratio analysis.
At a later stage when women are well informed with the movements of stock markets, they can choose to trade in index as well.
● In another simple term Compound interest is the Eighth Wonder in this world, said Einstein. The Sensex has grown from 100 in 1979 to 21,000 in 2014, an astounding 210 times, simply by compounding at nearly 16 per cent, in line with the nominal GDP growth of India. Does it not mean trading in Index itself makes one a better Investor or Manager?
GOLD ETF – 30 per cent STOCKS INVESTMENTS – 50 per cent SAVINGS IN BANKS – 20 per cent
Most women investors may think of risk as the potential to lose money in an investment. However, there is more to risk by not making such investments from their potential surplus or savings. It is what economists and business analysts call opportunity costs or opportunity loss.
● Opportunity cost simply is the loss or price you pay for making one decision as opposed to another. However, if one perceives that the market is poised for a big gain, sitting on a savings account would be more costly than investing; that is, the opportunity cost of choosing the safety of savings would be too high.
● One should always be concerned about the risk of losing money. However, playing it too safe carries a cost also. Therefore, to sum up, investing in Equity is a must.
Investing in stocks is different from Savings in Bank Meghna Govil Kohli
Women should always remember that investing is about taking an active role in putting your money to work for you, rather than letting it sit in a savings account.
On the other hand savings instruments such as fixed deposits or idle money lying in one’s savings accounts does not give ownership. One may have a FD in bank, but does not own part of the bank. One may have investments in Government securities e.g. Government bonds but they don’t own the Government.
● Investing is consistent with the personal-finance philosophy of managing your money rather than your money managing you.
● One’s expectations should be high, but realistic given oneʼs time frame and risk tolerance.
A new investor had just come in to see a famous stockbroker. “Can you tell me how much you charge?” said the investor.
“Of course,” the stockbroker replied, “I charge $500 to answer three questions!” “Well that’s a bit steep, isn’t it?” “Yes it is,” said the stockbroker, “And what’s your third question?”
We as women can definitely be a better Investor by simply our common-sense approach, our buying behaviour, products that we buy every day, every month and so on and so forth. It all ultimately represent in the stock market as Blue Chip companies that offer such services or products that we commonly use all the time. Let us all become a better Manager not just at home, but even in Investing. Our early and regular move would help us only in planning our savings carefully and efficiently.