The stock market has not traditionally been a women’s forte, but that is changing with increasing awareness about equities among women.
“The number of women who attend investor seminars at the Madras Stock Exchange has increased from around two per cent in 2008 to around 8 per cent now,” says Venkateswaran, former Director of the Madras Stock Exchange.
Yet many women shy away due to factors such as lack of knowledge on markets and finance and an overtly conservative approach to investing.
A few simple steps can help you enter the market with your right foot forward.
INVEST IN LEARNING
Heard of a company with hot prospects on TV or got a sure-fire tip from a friend? Don’t give in to the temptation and buy.
Invest time to learn about the market. Get familiar with industries and companies, factors that affect the market and how the market operates.
This may be daunting, but there are many sources for guidance. For instance, Geojit Financial Services operates all-women branches in cities such as Kochi and Chennai where you can walk in to get advice from women financial advisors.
Asa C R, who heads the Kochi branch, says financial education classes are offered at various colleges and women’s forums, such as Lioness Club.
The internet has a lot to offer, but note that you should only rely on trusted sources for information and knowledge. The websites of the BSE and NSE are good tutors, too.
BUY QUALITY
The lure of quick profit may spur you to action, especially if you are overwhelmed by the process of learning and analysis. For instance, one may not appreciate liquidity and governance risks when buying shares of a small company, compared with buying a blue-chip.
“Look for companies with strong fundamentals and less price volatility,” says Murali of India Cements Investment Services. He says many women tend to buy new issues or stocks covered in the media with a short-term view, rather than investing in stable growth companies with long term returns in mind.
“Start with the 30 companies in the BSE index or the 50 companies in the NSE,” suggests Dharini Sampathkumar, an independent consultant who runs training programmes in finance.
SMALL STEPS
Before you enter the market, it may be advisable to start trading with a mock portfolio on paper. Track a handful of stocks and buy them virtually. Follow the price movements, news and analyses to see if your pick is paying off. This way, when you start investing real money, you are already comfortable with the process.
When buying for the real portfolio, you can reduce risks by limiting the amount invested in individual stocks as well as the overall amount set aside.Invest a small portion of your overall savings and stick to cash trades instead of trading on margin.
STOP LOSS
What if you make a loss despite due diligence? Don’t panic, it is quite normal!The strategy to follow is to be rational, look at what has changed since the time of purchase and re-evaluate options in the light of new facts.
There are simple methods you can follow to contain losses. When Rama Ganesan, a housewife in Mumbai, started trading in 2005, she would be afraid when her trades ran a loss. She now sets stop-loss limits for every stock purchased, helping avoid emotional decisions and thus limiting losses.
BE ACCOUNTABLE
Thinking of switch your advisor over recommendations that backfired? Financial service providers we spoke to say that women, more than men, blame their professional advisors more and shirk responsibility for their trades.
While faulting others may save you from guilt, you cannot walk away from the fact that the decision to buy is ultimately yours. Look at how price levels suggested and analyst reasoning have come about. Also, look at information that offers advice to the contrary to see if there are merits in that argument.
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