A recent advertisement for a trading app goes along with the slogan; “Ye market sab ka hai” (this market is for everyone). The claim challenges the long-held notion that investing is generally male-dominated. “Everyone” includes women, and women include mothers, not just working mothers, but all mothers. This Mother’s Day is a good time to start talking about the importance of investing for moms.
It’s important to dispel the unfounded belief that women aren’t cut out for the risky, complex, and technical world of investing. According to a 2021 Women and Investing Study by Fidelity, between 2011 and 2020 in the US, women’s returns were 40 basis points higher than men’s. Another 2018 study by Warwick Business School of 2,800 investors showed that not only did women over three years outperform the FTSE 100, but so did men.
So it’s not a competency issue. Rather, it is about removing the artificial barriers that prevent women from participating in financial markets.
In India, these problems seem to continue to worsen and can be reversed with proper awareness of the potential and benefits of more women, particularly mothers, having free access to financial tools.
What are the new investment tools that can make women more prudent investors, and what are the opportunities?
mothers as investors
Investing is for everyone. Many argue that it is essential for women, especially mothers. Investing can improve the socio-economic conditions of families and increase the economic potential of any nation.
A University of California-Berkeley study of investing patterns shows that women are more risk-averse, research more carefully, are more disciplined, and are more confident than their male counterparts. These traits show caution and a desire for stable returns. As the foundation of the family, mothers strive for a stable income for their family and children and can ensure this through prudent investments.
According to the study, women remain invested for the long term and tend to be disciplined when allocating wealth. As a result, mothers are more likely to steadily build wealth, earn a stable second income, and enhance the family’s economic well-being.
Invest in what?
The question then is, what are the best investment opportunities? While most studies and reports focus on investing in stock markets and the stock market, there are a variety of investment opportunities.
For moms who want to invest in instruments that are relatively hassle-free and provide a stable income, it is advisable to look at options such as real estate.
When it comes to real estate, women may already be making money by renting out houses or parts of their houses. Women can earn a second income through rent. However, residential real estate is only one aspect of real estate and offers less income growth than commercial real estate.
If you stick to the numbers, residential property offers a 3% rental return on your investment, meaning a house at Rs 50 lakhs would bring in Rs 12,500 per month in rent. On the other hand, a commercial property worth Rs 50 lakh can offer almost three times more rent.
The commercial real estate (CRE) sector has received a tremendous boost from more accessible vehicles such as REITs and fractional ownership, which have made the market more accessible to retail investors.
REIT is an investment trust that owns, manages and operates income-generating real estate investments. It allows retail investors to invest in this platform and generate income in the form of rental returns and property appreciation.
Besides REITs, the other important factor that can drive commercial real estate forward is fractional ownership. Partial real estate investing is a popular investment option in the US and Europe and is emerging in India. Industry experts predict strong growth in the coming years and India’s volume of prime office space will reach 1 billion square feet by 2025. A significant portion of this investment would be concentrated in fractional ownership.
Commercial real estate & benefits of fractional ownership
Fractional ownership has lowered the cost of entry into CRE and works almost like real estate crowdfunding. These tools have also shown how retail investors can achieve superior returns when investing in commercial real estate versus residential real estate.
Fractional ownership solved one of the biggest problems with commercial real estate, namely high capital investments, encouraging small investors to enter the market and making it a viable investment format for new-age investors.
Additionally, CRE’s long-term capital appreciation provides insight into how the real estate sector can meet its $1 trillion goal by 2030.
On the way to financial freedom for mothers
As prudent investors, mothers can transform not only families, but the nation. The International Monetary Fund says increasing women’s participation in financial services would have benefits beyond reducing gender imbalance. Closing the gender gap brings stability to the banking system while boosting economic growth.
Every day can be Mother’s Day… to invest.
The author is the founder of hBits, a fractional real estate platform with 35 years of experience behind it.
Disclaimer: The views expressed in the above article are those of the authors and do not necessarily represent or reflect the views of this publisher. Unless otherwise noted, the author writes as a private person. They are unintentional and should not be construed as official ideas, attitudes, or policies of any agency or institution.
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