Let’s talk money. When was the last time you said this to anybody other than while finalizing a deal? But money, and our relationship with it—our fears, greed, insecurities and over-confidence—define who we are and what we do. Paradoxically, talking about money has been frowned upon as gross in families and social situations. The rich are called “filthy rich”. “Being above money” has been an aspirational moral position for most of middle India.
Much of this attitude has roots in a deeply poor country with limited avenues for honest wealth creation. The Bollywood smuggler of the 1970s had his bungla, gaadi and daulat, but not his mum. Today, the mum has her own life along with her own bungalow, car and wealth. And no, she does not want to play nanny to your leaking kids.
When we think of a book on money and its management, we think of pie charts and bar charts. We think of boring jargon-filled text. Let’s Talk Moneytries to smash all these notions and brings the reader a book that is a slice of their lives. It aims to help the reader build financial security without the usual fear-mongering or guilt-tripping about enjoying a Starbucks at work every day. Edited excerpts:
At the 4th edition of the annual Mint Mutual Fund Conclave last week, the overarching theme was the question: should FY 2018 be called the year of the mutual fund? For an industry that just two years back was still calling itself ‘nascent’ 24 years after privatisation, it is a giant leap forward to have assets under management that have tripled in the last five years. Mutual fund assets are now one-fifth of bank deposits and almost two-thirds of the assets under management by the life insurance industry. G. Mahalingam, whole-time member of the Securities and Exchange Board of India (Sebi), in his keynote address, said that possibly the external factors that helped this growth, such as easy money policy overseas for the last few years and more recently, demonetisation, are coming to an end, and now the real mettle of the industry will be tested. He said that several regulatory measures that are coming in the days ahead will ensure that the industry is investor-friendly. One, the scheme merger announcement will be made soon by Sebi. Two, the work on the total expense ratio (TER) going down must begin. Third, investor-friendly disclosure measures such as using the total return index should be taken. “Good times are the best times to swallow bitter medicine,” he said.
I met a colleague recently who’d been out for a week. Holiday, I asked with just the right note of envy in my voice. Nope, he said, medical emergency—mum had a stroke. And then he cracked up. All through the hospital stay, he said, he was replaying what I would keep telling him—get a medical cover. He said he meant to but kept putting it off. He was also banking on the workplace cover he thought covered him and his dependants. But he realised at the hospital that the company, in an austerity move, had reduced the cover to his nuclear family and chucked out his dependent parents from the group cover. He dipped into his savings, of course. But the thought that the entire expense running into several lakh rupees could have come out of a policy left him really upset. It’s like discovering you’ve forgotten your mobile charger just as you step into the aircraft for a week-long trip, he said. It’s that oh-shoot moment in your life.
Two years ago, I had a dream. It was vivid as some dreams are. A giant elephant was being taken to be chained up. I remember waking up traumatized at the anguish of the animal at being pulled, pushed and dragged back to the place from where it had so recently got free. For some reason I still feel the helplessness of the beast, who simply wanted to be free. I can’t help but see the analogy with us as an aspirational nation, being bullied, dragged, prodded and pinched into going back to the 1970s. Having grown up in a middle-class DDA colony in Delhi, one set of the memories is about the lack of everyday things. Everything was in short supply – milk, butter, ghee, eggs. The line at the Mother Dairy milk booth would stretch 50-60 people long.
You book a Delhi-Mumbai flight and the online travel site says the journey will take two hours. It takes four due to sudden bad weather. Would you use that site again? Sure—it wasn’t the fault of the site that the weather turned bad. Let’s complicate the story. Your paediatrician advises you against the chickenpox vaccine. The week after, your child goes down with it. Do you stop going to the doctor? No, you took a considered decision and are OK with the kid being out of action for a couple of weeks—chickenpox can be treated with medication and rest, unlike the more life-threatening diseases that need vaccination.
When retail investors begin to jump onto an investment idea that is either complicated or offers very high returns or both, you know that the end is near. We never hear of investors rushing suddenly to the idea that large-cap funds are so cool. Or that the Public Provident Fund is the next best thing after toasted bread. Nope. But you get asked if it is a good idea to buy a contract on a commodity exchange to earn a sure 15% return — and by a person who otherwise has just fixed deposits (FDs) and real estate in his portfolio. This has happened so many times that it is almost a rule set in stone. So when some three months ago I began getting questions from readers and viewers about investing in 100% guaranteed products offering double the FD rates by brokers on the National Spot Exchange Ltd (NSEL), it was clear that the unravelling would begin soon.
It’s been just over five months since I began doing a weekly personal finance show on Bloomberg India TV. Called Smart Money, the show is about offering strategies to people who are looking for hands-free money management. It’s for people who want to put in place a grid that they can service while they deal with flooding roads, politics at work, kiddy tantrums at home and that darn neighbour who parks in your place just to irritate you. The battle of everyday life of urban middle-class India leaves little time for goals such as everyday workouts and financial planning. The show seems to be helping for we get more than 25 to 30 mails (other than tweets and SMSes) a week sharing detailed financial information and asking for a strategy.