Personal finance management tips for women .....

Women need to handle their finances differently from men. Mainly because of the differences in the earning patterns and priorities that women set for themselves their finances should be managed in a different manner.

The basic goals of personal finance remain the same, i.e.,

• Ability to meet daily expenses and lead a quality life
• Provide for emergencies and unplanned expenses and
• Savings for life after retirement

However, the way in which men and women achieve these goals is different. While men earn money uninterruptedly throughout their working lives, women often need to take a break, especially when they have children.

Other reasons like orthodox family backgrounds, change in location after marriage, change in spouse's job location, household responsibilities etc can also require women to put their career on the back burner. We have the much debated case of Mrs. Sudha Murthy- wife of Mr. Narayana Murthy [ Images ], founder of Infosys [ Get Quote ].

The couple was instrumental in building the Infosys dream. As the business started taking shape, the couple decided that one person was required to take care of their home and family. Mrs. Murthy gladly stepped aside to be the homemaker and let her husband fulfill his dream. Cases of women going abroad on a dependent visa with their husbands are not uncommon.

So, if a woman earning Rs. 50,000 per month takes a 5 year break from her job because she wants to be at home with her child, her earnings and thus savings take a hit of Rs 30 lakh (Rs 3 million). We have not yet considered any increment in her salary.

If we consider that her salary increments by 20 per cent each year, her loss of earnings will come to Rs. 44.65 lakh (Rs 4.47 million).  That's a big number. Also, when she resumes work, she may have to compromise on the job profile, position and hence salary. Therefore, the percentage of savings should be higher for women during their working life.

Besides, the life expectancy for women is higher than men. So, the amount of retirement savings for women should also be higher. Statistics show that, on an average, women live 5 years longer than men, earn 25 per cent less during their life time and work 11 years less in their careers.

Importance of having an individual personal plan separate from your spouse

It is important that women have a separate personal finance plan from her family, be her parents or her husband. With changing times the need for separate finances has increased. The rise in divorce rates is alarming. The surety of life is also lower with increase in accidents and stress related ailments. If a woman handles her own finances she is well prepared to handle money matters individually if the need arises. Knowledge of different investment avenues, savings and expenses is important to run a family. A separate personal finance portfolio will prepare a woman to face financial challenges.  Also, she will not have to bear a monetary loss in the event of a divorce.

Finance products and benefits that cater to the needs of women

There are many products that are created for women. For example, insurance companies have special policies for women. The country's banking system has several products launched for the female audiences. Our tax system also relaxes the tax bar for women. Income up to an amount of Rs 1,90,000 is not taxable for women. This limit is Rs 1,60,000 for men. Here are a few products catering to the needs of women:-

Product Name	Features	Provider name
Jeevan Bharti Insurance policy	The policy does not lapse in the event of failure to make premium payments for a few years. It covers critical illnesses related to women	LIC [ Get Quote ] of India [ Images ]
Smart Privilege Account	The bank offers automatic insurance coverage for critical illness related to women. The debit card linked o the account fetches discounts on certain products from Lakme Beauty Salon, Dominos etc	UTI Bank [ Get Quote ]
HDFC [ Get Quote ] Women's Advantage debit card	The card offers various advantages like discount on locker fees, insurance packages, free bill payment services etc	HDFC Bank
Home Loans	The bank offers low interest rates to women – 0.25 per cent lower rate than prevailing interest rate.	Punjab National Bank [ Get Quote ]

A personal finance plan for women should include the following:

•      Regular Income – even when women take a break from their careers, it is a good idea to earn income from working a few hours a day. Taking tuitions, teaching a hobby etc are common ways to earn a regular income even when one is not working full time.
•      Keep an emergency fund. Do not touch it unless it is a real emergency.
•      Save and invest as much as you can. Invest in 'high return' investments. Some part of the savings should go in to stocks and mutual funds as they have a high earning potential. Look for women oriented products.
•     Time your investments for known expenses likes children's education or marriages
•     Demarcate clear boundaries with your spouse for routine expenses. It will be easier to determine personal monthly expenses and hence monthly savings.
•     Track your savings and investments regularly.
•     Have a financial plan. Save as much as you can at an early age when you have limited responsibility.

Assuming you plan to save 50 per cent of your income every month and wish to invest in different investment products, you could compartmentalise your investment into various risk categories:

Life Insurance policy 1	10 per cent of savings
Life Insurance policy 2	10 per cent of savings
Health Insurance policy	5 per cent of savings
Fixed Deposits, NSCs, PF, PPF, Emergency funds	45 per cent of savings
Stocks and mutual funds	20 per cent of savings
Gold and other jewellery	10 per cent of savings

You can change the portfolio as per your risk appetite. Life Insurance is a must. However, it is advisable that you set aside the money for making premium payments even when you are not working.

Best 10 Mid - Cap Stocks for long term investors

1. One stock, which stands out as an odd man in the list, is Balrampur Chini.It is one of the largest and most efficient sugar manufacturers of the country. Its financials for the past two years may not be encouraging, but ETIG reckons that sugar as an agricommodity is one of the most cyclical industries.

The reason why this stock is a good bet because the outlook for sugar prices is buoyant as of now. Therefore, sugar companies are expected to do well in the course of next two years atleast. It also has diversified into alcohol and power generation, which together accounted for around 30% of Balrampur Chini’s revenue in March’ 09 quarter. These segments will help the company in tiding over the slowdown.

Mid-caps tend to be more volatile than large-caps. However, the volatility is more in stock price than in fundamentals. So, even if they get beaten in a stock market downtrend for some months, over long period, they are expected to bring gains to investors.

Valuation at Discount:

March 31 2005: 16.8
March 31 2006: 25.9
March 31 2007: 8.3
March 31 2008: -33.8
March 31 2009: 16.7

2. Blue Star is one of India’s leading manufacturer and supplier of air-condition and climate control equipment.

It also manufactures and markets a range of commercial refrigeration products and services catering to the industrial, commercial and hospitality sectors. The future of this company depends upon the performance of industries like financial services, construction, IT, ITES, hotel , healthcare, infrastructure such as airport.

Most of these industries are expected to grow at high rates if Indian economy continues its growth trajectory. The company is far ahead of its competitors in terms of cash flows, as it has reported 60% CAGR in net cash from operations in the last four years much better than earning growth. Moreover, it has a track record of sustained high dividend payouts unmatched in the industry.

Valuation at Discount:

March 31 2005: 11.7
March 31 2006: 28.7
March 31 2007: 30.2
March 31 2008:27.2
March 31 2009:14.9

3. CRISIL, a market leader in research, rating and advisory businesses in India, also offers services like bond rating, rating for bank loans and industry reports. On the government side, it has an advisory segment, which helps agencies in infrastructure, policy and energy. Its business is less prone to the health of corporate India because most of its research products are subscription based.

Valuation at Discount:

March 31 2005: 22.5
March 31 2006: 42.0
March 31 2007: 48.3
March 31 2008:32.0
March 31 2009:17.5

4. Engineers India provides engineering and technical services to petroleum refineries and other industries like highways and bridges, IT, airports, and ports and terminals. The company is likely to gain significantly from huge investments planned by the government in the oil and gas sector.

As on March 31, 2008, the company had Rs 1,270 crore of cash in its balance sheet. This translates to cash per share of Rs 226 and accounts for more than a quarter of its stock price.

Valuation at Discount:

March 31 2005: 18.9
March 31 2006: 34.3
March 31 2007: 18.7
March 31 2008: 20.8
March 31 2009: 19.7

5. LIC Housing Financeare by far the most insulated companies in the banking and financial space. If there is one mortgage company to reckon with in India after the behemoth HDFC, it is LIC Housing Finance.

The mortgage players are prone to slowdown to a certain extent as housing is a fundamental need and house-ownership levels are low in India. LIC Housing Finance has grown its mortgage portfolio by 23% per annum in last three financial years.

Valuation at Discount:

March 31 2005: 11.0
March 31 2006: 8.9
March 31 2007: 5.1
March 31 2008: 6.6
March 31 2009: 8.7

6. Opto Circuits is engaged in manufacture and export of invasive and noninvasive medical equipment like sensors, pulse oximeters, monitoring systems and stents among others. The company is a major supplier of sensors to large original equipment manufacturers. The company has used the inorganic route, especially overseas acquisitions, to grow at a rapid pace in the past few years enabling it to expand its product portfolio as well as enter new geographies.

With its niche products, reach in foreign markets and aggressive growth, the company presents a promising growth story.

Valuation at Discount:

March 31 2005: 17.0
March 31 2006: 25.3
March 31 2007: 30.2
March 31 2008: 29.2
March 31 2009: 21.2

7. Shree Cements is one of the fastest growing cement companies of India. Its net profit has jumped by over 20 times in last four years. Its plants are at one location, which helps in reducing overheads and makes it one of most efficient cement producers in the country.

The company now plans to invest Rs 1,000 crore in capacity expansion in a year’s time. The stock has almost doubled since the start of current rally but historically speaking, it is trading at very low valuations. Moreover, at current valuations, it trades at huge discount from the valuations of larger players.

Valuation at Discount:

March 31 2005: 26.7
March 31 2006: 51.1
March 31 2007: 15.5
March 31 2008: 23.1
March 31 2009: 6.3

8. Shriram Transport Finance is by far the most insulated companies in the banking and financial space. Growing at even higher rates is Shriram Transport Finance, which posted a CAGR of 47% in its assets under management in same period.

The company provides finance for the purchase of used commercial vehicles. This makes it insulated, as unlike new commercial vehicle segment, which is highly cyclical, the demand for this kind of financing depends upon exchange of existing commercial vehicle and not capacity expansion.

Valuation at Discount:

March 31 2005: 6.5
March 31 2006: 18.7
March 31 2007: 11.4
March 31 2008: 19.9
March 31 2009: 9.7

9. Sintex Industries is a leading manufacturer of plastic products which includes pre-fabricated building materials, monolithic structures and custom moulded products. It has already acquired seven companies in a short span of 2 years and is currently looking out for more. Its pre-fabricated building materials and monolithic construction material are finding great demand in low cost housing projects and rural schools or healthcare shelters.

Valuation at Discount:

March 31 2005: 18.3
March 31 2006: 29.1
March 31 2007: 20.0
March 31 2008: 26.7
March 31 2009: 11.8

10. Tulip Telecom provides solutions in the space of corporate data connectivity and network integration. It caters to both government and corporate sector and has a strong client base across both the segments.

Tulip has undertaken capital expenditure to strengthen its presence in the VPN (virtual private network) space. It is laying fiber optic network to provide high bandwidth last mile connectivity to its enterprise customers in 10 major cities. This along with government’s thrust on rural connectivity is expected to keep Tulip’s growth momentum going.

Valuation at Discount:

March 31 2005: NA
March 31 2006: 23.6
March 31 2007: 22.9
March 31 2008: 16.2
March 31 2009: 10.1