Moneylife Foundation continues its successful series on financial literacy
The two basic aspects of managing your financial life are: avoid losses by staying away from scams; and invest smartly and steadily to generate wealth from your savings. This is encapsulated in the educative and highly interactive seminar—“Be Safe and Smart with Your Money”, the flagship seminar of Moneylife Foundation (MLF). MLF has taken this message across the country. Most recently, we were Pune, for the fourth time with this seminar.
Sucheta Dalal, managing editor of Moneylife and founder trustee of Moneylife Foundation, in the session titled “How to Be Safe with Your Money”, spoke on the several ways an unsuspecting saver can be made to part with his hard-earned money.
In the second session on “Be Smart with Your Money”, Debashis Basu, editor & publisher of Moneylife and founder trustee of MLF, took the audience through simple steps for investing smartly. The event, which had a packed audience, was held at the Mahratta Chamber of Commerce Industries & Agriculture (MCCIA).
Ms Dalal started by pointing out that financial products are fundamentally different from consumer products. You can test-drive a car but you cannot test-drive a mutual fund; the fate of your investment becomes clear only later. Moreover, in consumer durables, brand names mean something. Not so in financial world. However, people translate their experience of buying consumer products into financial world and regret their decision.
The six mantras, articulated by Ms Dalal, include: protect your money, insure for securing future, avoid credit & investment traps, focus on a few safe products, avoid emotional traps and maintain financial hygiene. “Smart people are easier to cheat,” she noted, adding, “high-achieving professionals are often defrauded.”
Ms Dalal explained that credit history and credit score reports have become increasingly important.
While Indians save a lot, they keep their money safe in bank deposits. Majority of savers are left confused about how much to invest and in which financial products. Left with confusing choices, majority of savers opt for bank fixed deposits which is a safe and easy option. In the second session, Mr Basu highlighted that this is just the wrong thing to do, especially for those who are in the highest tax bracket.
Usually, we have different financial goals, such as saving on taxes, buying a house, child’s education etc. Mr Basu explained that there are specific products for each goal and one should invest only in these.
Further, he explained the risk and returns associated with each financial investment. He took the audience through the pluses and minuses of different asset classes, such as fixed-income, gold, real estate, stocks/equity mutual funds and insurance. He also repeatedly emphasised that most people don’t see the huge risk of inflation eating away their wealth.
Mr Basu asked the audience to calculate everything on a post-tax and post-inflation basis. If you really want to gain from the enormous wealth that stocks and mutual funds (MFs) can create, you have to understand this and stay patiently invested in good MF schemes or a bunch of good stocks, advised Mr Basu. The three and a half hour seminar concluded with a lively question & answer session.