Are you wondering if you can help your household help to become financially independent with mutual fund investments? This is a great step as they give a boost to financial inclusion for everyone. Firstly explain your household about what is a mutual fund. They should also be aware of the benefits of mutual funds to be entirely on board with it. Once they are on board, how do you invest in mutual funds via SIP for your household help?
- Firstly, ensure that your household help has a bank account. If they don’t, consider availing the services of Jan Dhan account opening as they are quite easy to use. In order to open a bank account, you need their PAN (Permanent Account Number) card details and ID proof, such as Aadhar card, etc. The primary advantage for those opening the bank account is that they can have an account even with a minimum balance and an ATM card. You can also enable net banking.
- Further, to invest in mutual funds online, an investing account is a requisite. Just ensure that the investments are in the name of the individual for whom you are planning to invest. It’s a good idea to teach them about the functions of net banking and ATM card usage. This won’t be difficult as smartphones are becoming quite common among common people. website here
- Evaluate a suitable asset allocation strategy and choose among different types of mutual funds according to their needs. Quite often, the primary requirements for them are having an adequate emergency fund. Since they should typically invest for the long term, a good portion of the savings should be in equities and rest in fixed-income securities, thus creating a diversified portfolio for their investments.
- Help them understand cash flow associated with returns on mutual fund investments. The first thing to achieve is to encourage regular and systematic savings. Help them understand the significance of savings and ensure that a portion of their monthly earnings is saved which is further invested to grow their wealth over time. Explain to them that any extraordinary inflows or annual bonus can be used to ramp up their savings.
- Don’t forget about insurance. In several situations, healthcare-related expenses for them or their family tend to be a key reason why people, especially those belonging to the financially weaker sections of society, are unable to save. Taking a health insurance policy for you and your family, even small would help them stave off one of the most common reasons they often end up losing their savings. There are several government schemes these days that cover health care at significantly low costs and financially weaker sections of the society can consider these. Happy investing!