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5 Ways To Ensure Your Wife And Children Invest Wisely

3 minsDecember 06, 2016

Sunita, a successful senior manager at a leading MNC, juggles work and office. She is a mother of two beautiful daughters aged 5 and 2. Among meeting office deadlines, school homework, and caring for her aged in-laws and parents, focusing on her investments is the last thing on her top of the priority list.

For her, investment decisions were mundane and she was happy to “outsource” it to Vishal, her husband who seemed to have things in place until disaster struck the happy family. Vishal was hit by a speeding car as he was crossing the road and lost his life before help could arrive.

The grief struck Sunita had to now don a new role of investment manager and she had no clue where to begin. Investing seemed complex and confusing. Moreover, her “well-meaning” bank relationship manager took her for a ride by making her speculate in the stock market under the disguise of investing. She realized it after she lost a few lakh. The experience was bitter. She not only lost trust in her abilities but also lost trust in honest advice!

Haven’t we all met Sunita? She could be a next door neighbor, an office colleague, a friend, sister or even our daughter. She could even be you. Although, when we read this story, we quickly shield ourselves with—“Ye mere saath nahi hoga”(This won’t happen with me), the situation needs our alarming attention.

Even as women step out of the house to make a mark , the social roles seem to revolve round archaic customs and traditions — men are expected to be the providers; while women are expected to nurture and care. A well-meaning discussion on investments is often forbidden, hurting the inflated male ego, and doesn’t easily find its place within our cultural and social dynamics.

However as we embrace the challenges of the 21st century, the responsibility lies on your shoulders to change this situation and provide for a future where our spouse and children are matured enough to make informed decisions without being taken for a ride.

Although the thought seems great, how do we go about it? Charity begins at home!

  • Discuss and share ideas:
    • It is important to discuss and share your investment philosophy with your family. Share the reasons you have taken a particular decision and how it will benefit the family. Take into consideration their views, ideas and educate them. The idea is to have an open discussion with the family in order to boost their self-confidence by encouraging them to ask questions. This will be the important first step in guiding their outlook towards money.
  • Keep all your records at one place:
    • This seems like common sense, but most individuals fail to keep their spouses updated about their investments. It is all locked up in a password protected excel sheet on the office desktop or personal laptop with little or no idea given to the spouse.
    • In case of an emergency, your spouse should know: the health insurance policy number, the name and contact number of your insurance agent, the mutual funds/other investments that need to be liquidated, and so on. It is absolutely necessary to share these details with your spouse. If your spouse isn’t tech savvy, maintain a diary, where the details are easily accessible to her.
  • Allow them to fail:
    • No one knows everything. Thomas Edison said, “I have not failed, I have just found 10,000 ways that don’t work.” But unfortunately, we tend to reprimand individuals for failing. We don’t celebrate the lessons from failures like the victories of success. Failing is an important step towards learning. All of us have failed at some time in our life. It’s important to have a positive outlook towards failures.
    • Share your life experiences with the family—how you made an investment blunder and how you overcame the disaster. Ask your spouse to start investing a small portion of her salary/income, and guide her prudently at all times. If you aren’t competent, seek help of a financial guardian , who’ll take enough care as he would while managing his/her own finances. Women are less impulsive than men when it comes to making investment decisions and are open to admitting their mistakes—two important traits necessary for any individual who wants to learn the art of investing. There is no better teacher than personal experience.
  • Thumb Rules and Games:
    • Thumb rules come handy when you are just starting-off investing. A simple concept of diversification can be explained by allocating an equal sum to equity, debt, gold, and cash in hand.
    • For children, share the idea of a piggy bank, invite them to save, explain the benefits of delayed gratification, bank of mom and dad, Rule of 1 by 3, etc. These are handy tips to money skills early in their life.Purchase personal finance board games like Monopoly, Chanakya’s Chakravyu or Robert Kiyosaki’s Cash Flow, to imbibe necessary cash flow and money management skills in the children.
    • The idea is to make investment learning fun and interesting.
  • National Financial Literacy Assessment Test (NFLAT):
    • NFLAT is a great way to assess the financial literacy amongst your children. The test is conducted by National Centre for Financial Education (set up as a part of National Institute of Securities Market) to measure the level of financial literacy among school students especially from class VIII to X. There are prizes awarded to students based on their success in these exams.
    • Remember the words of Ms Melinda Gates, “When we invest in women and girls, we are investing in people who invest in everyone else”. So, let us plant a seed to change the future of our loved ones by breaking social mores that stymies their progress.

The above suggestions, along with a PPF account (which can also be linked with a savings account), can act as a good starting point for shaping minds and making our near and dear ones financial literates.