His Qualification Got Her Education

Recently I went to my childhood friend Gitika’s home for a long due catch up. Actually, celebrations were in order since her husband Deb had bagged a coveted assignment in Hong Kong for 2 years, upon his graduation from Indian School of Hyderabad, Hyderabad.

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I knew it would be a long evening of chatting up – everything from last one year’s sabbatical to plans of working out the next 2 years of Deb’s international stint. I was worried for my friend who would have to take charge on many fronts especially with her preschooler daughter. To my surprise, she seemed smug and confident of pulling it off. I knew there was lots to talk 🙂

The Background

Both Gitika and Deb passed out as Finance majors in MBA. Gitika stuck around with her company as a Senior Analyst pre, during and post pregnancy and is blessed to have flexi hours at work. This gave cushion to Deb to pursue his second masters, despite them being new parents.

Gitika for one, had always been phobic of finance and completely depended on Deb. But after his first month at B-school, Deb was in an intensive environment to make any time for family matters. Completely on her own, Gitika did struggle but slowly realized there was nothing difficult about managing money.

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How Gitika got a new Avatar?

Managing single income, motherhood and office was getting overwhelming for Gitika once Deb was gone. She tried to put a calendar for all to-dos, but money was still out of bounds for her since it was Deb who always managed it. On a chance, she met a professional investment adviser and that became a turning point for her.

The Action Plan

Over a skype call with Deb, she and the adviser took notes of all their current investments, expenses and their money needs over short and long term.

The adviser told Gitika that the way to approach financial planning is securing an Emergency Fund first, setting your financials Goals, Protection by way of Insurance and finally making Investments.

Since Deb was planning a break for a while, he had kept aside funds to fall back on. He had taken adequate protection plans and Gitika’s office had a great Health plan to cover all three of them. So, the all-important Emergency and Insurance was taken care of.

Gitika had access to Deb’s bank accounts. With the help of adviser, Gitika moved surplus funds from bank account to a liquid fund which also funded Deb’s living expenses through a Systematic Withdrawal Plan.

In addition, Deb exited all his shares that he could not track anymore and invested in an Equity Mutual Fund. The adviser also started SIPs for Gitika in a Balanced Fund and ELSS for tax saving. A special investment for their daughter was done in the form of Sukanya Samriddhi Yojana.

Gitika made sure she met up with her adviser once every quarter and this continued her learning process. Once Gitika got into the groove, she knew that she was doing a better job than Deb too.

My Friend, My Hero

I have to say a bold move by the couple to opt in for studies. But an even bolder move by my friend to overcome her phobia. The inhibitions about money are common. But like every other challenge, all it takes to overcome is a Resolve to #BreakTheMould.

 

The Corporate Mom

Hello Moms! This is our part 2 in the Millennial Mom series. I am sure you recall our first one was The Media Mom.

To get started, I remember a discussion that dates back in time when I was a salaried employee. I was discussing my tax plan or rather the lack of it with another female colleague. I thought I was in pits as far as my investments were concerned, but to my utter surprise, my friend said that she has never made a single investment on her own. “There is something done by her husband on CA’s advice”, were her words. At that point, we were joined by another team mate and a senior, and the all women’s team shared their investments. A 5 year FD and real estate respectively were spoken of as their investments. But when asked, why these instruments, for what time horizon, what would be their future money requirements be like, these questions drew a blank. 

Now, Moms let me profile these women. Working millennial moms, married to high pressure jobs, over worked most of the times, all very well paid. Academically, management degree holders, fitness lovers, keen readers, well turned out, well travelled, conscious eaters and aware parents. Wouldn’t you expect them to be on top of their finances? But here’s the truth, they may have been HNIs along with their spouses but they were clueless about wealth creation.
Just like my colleagues, there are many millennial moms who have high disposable incomes but lack of awareness, interest and time add up to their financial ignorance. 
So there! We are sharing investments that the uninitiated can consider. These are overall recommendations which can aid in wealth generation and tax planning. However we do encourage our Corporate Mom to take help of a professional financial planner.

Emergency Fund: This is a critical element that we all must pay heed to. All the planning may go for a toss if we don’t keep an accessible emergency fund. Keeping all the money invested with a long term view may not be the best idea since exigencies can come down as a hard reality.

You should consider your 3 to 6 months expenses in emergency fund. If you are savvy about growing your money, then you can park the emergency funds in short term debt funds.

ELSS Funds: Equity Linked savings schemes are an ideal tax saving tool which can give better returns than traditional tax saving schemes. These are essentially tax saving mutual funds that come with a 3 year lock-in.

PPF: For those who are risk averse can invest in PPF for its tax efficiency but declining interest rates are definitely playing dampener on the returns. Plus a 15 year lock-in is a long enough horizon to get above-moderate returns from market linked products.

Mutual Funds: The equity markets have been climbing charts for the last few years. MFs have also been doing well therefore. Since MFs are professionally managed by a team of experts, they can be the best vehicle for working people. You don’t have to monitor market movements everyday basis. 

New investors with a long term horizon should start with large cap funds or balanced funds. 

The most preferred way for the salaried is Systematic Investment Plan better known as SIP. We will speak about it in detail in a following post.

Term Insurance: An important part of financial literacy is life cover. However due to misspelling and ignorance, it is not emphasized enough. Term Insurance is the protection that all income generators should take to cover for their lives in case of any uncertainties. It is a must for the Corporate Mom who makes a crucial contribution to household income.

In addition to above, working moms can also invest a small portion in Gold ETFs or if keen, then dabble in Equities with a long term view.

In the end, all we can say is investments don’t take as much time as we think. Moms and all women should consciously take steps towards investing. Remember Earning for Spending is not the deal, Earning for Growing is.