Issue #58: Money management and the female brain - Part 3
What are those tips and tricks you have been waiting for?
To read Parts 1 and 2 of this series, click here and here.
I drew my first salary as a stressed and petrified 22-yr old, nervous about what would truly remain in hand after un-understandable taxes, un-manageable rents, and un-traceable dinner expenses.
Little did I know that I would be even more petrified with what remained in hand, unsure of where to park it safely, a regular savings bank interest rate not attractive enough.
Eventually, I netted off at a gold coin. Gold is the safest investment, I had always heard as a child, learnings from my MBA degree about asset classes could wait.
Anyway, to cut my long winding story, I learnt with time, what to do with my money.
But, what might you want to do, if you want to do it all correct, whenever you start investing your own money, inspired by all those stories from Part 2 of this series.
Identify a broad range of money available to put away or save every month. If you are in a full time job, remember this might be over and above retirals (or PFs as called in India) that gets deducted from your salary already.
Try to mull over your risk appetite. There are some frameworks of course.
Young with little / no disposable income at hand and hence wanting to play it safe rather than sorry - low risk
Young with little / no commitment over the medium term, wanting to experiment a bit with your money - medium risk
Middle aged or older, new to the game of investing and wanting assured returns to keep you motivated - low risk
Middle aged or older, have already played the low risk-low return game for a few years and want to go the extra mile - medium / high risk.
Unlike the US where retirals are linked to equity markets, in India, retirals are linked to low risk low return debt funds. So, you might have more money to play with in medium risk or more because a fair chunk is already tied into low risk instruments if you are in India.
Be conscious that the extent of risk means different things for different people. X’s high risk might be crypto while Y’s high risk is 100% equity funds, and Z’s is at Sovereign Gold Bonds. All of them are valid options depending on where you fall in the risk-return continuum.
Depending on where you net off, start your research. This could be shares and mutual funds linked to industries you understand. Or it could be index-linked mutual funds which diversify your risk and drive returns based on how the entire market moves. Triangulate your research from various sources. In India, this could be valueresearch, moneycontrol, CRISIL, ICRA etc.
Consider your own time commitment to the “job” of investing. For some people, it is a near-full time passion that they relish. For yet others, it’s high touch (i.e., once a day). For many of us though, it is just a chore that we want to be involved in and not necessarily dedicate everyday hours to. For instance, steady monthly investments that can be revisited every 6 months is my equilibrium.
Find a way to execute your decisions. It could be an easy-to-use investment app or an outsourced partner.
Even if you outsource the work to a third party, steps 1-4 are still critical, while high level research on 5 is necessary to be aware and in-the-know on where your money is going to be parked.
Does all this sound overwhelming? Are you still unconvinced? Why don’t you try doing all of this, not with the entire money you have access to but a mere 1-10% of? That could be INR 1K - INR 5K a month. See what happens to that investment over a six month period.
Nothing works to boost our confidence like test and learn does.
P. S. Views strictly personal. I am not a certified investment advisor and have steered clear of pointed advice in that area consciously.