What inspired you to write What Every Indian Should Know Before Investing? Was there a particular moment or experience that motivated you to educate others on this topic?
After around 15 years of working, I was planning to take a sabbatical to figure out what I should do in the second half of my career. After such a long working life, I thought I would be in reasonably good financial shape. But that’s when I got the shock of my life. I realized that most of my money was invested in low-return or ill-liquid options like endowment schemes, fixed deposits, and real estate. The money that I could use – the liquid money – wouldn’t have lasted more than a year for me. At that moment I realized that I cannot continue to manage my money like that. That I need to understand how to invest and manage my money better. I decided to research about investing and during the course of this realized that there were lakhs of people like me who were working hard for their money but managing it poorly. I therefore decided to share my findings in the form of a book.
Could you share a bit about your background and how it has influenced your perspective on investing and financial planning?
I was brought up in a typical middle-class family in Mumbai. By qualification, I’m a BSc. Physics and a software programmer. But ever since I was a child, I was passionate about writing, especially advertising copy. So, I started my career as a copywriter. But after a few years of working in the advertising industry, I moved into the software industry. Here, I worked as an instructional writer, technical writer and then went on to manage software product development. Apart from other learnings, my work experience helped me understand how to structure complex content into manageable information. This helped me a lot while writing my book. In the early phase of my life, I just had no clue of how to invest and manage my money. All the information I had was what my parents had passed on to me. This meant, working hard, earning well, saving enough, and investing in fixed deposits, buying life insurance schemes, getting a loan for the house and so on. It was only while researching for my book that I realized how I have been mistreating my money. Currently, I have a much better relationship with my money. I am now able to track, plan, and invest my money much better. I just wish I had learnt about this earlier in my life.
Your book covers a variety of investment schemes such as PPF, Mutual Funds, Fixed Deposits, Life Insurance, and Stocks. Which of these do you think is the most misunderstood by the average investor, and why?
It must be mutual funds. For anyone who does not have any understanding of mutual funds, it might look complex and intimidating. But if you just take the trouble to understand the concept of mutual funds, it can be pretty simple and straightforward. If you are able to invest in the right scheme, the rewards can be life changing.
How do you approach the challenge of making complex financial concepts accessible and engaging for readers who may not have a strong background in finance?
Since I came from a non-financial background, I realized that it was my lack of familiarity with the jargons in the industry and the fear of numbers that made me avoid anything related to money and investing. In addition, every investment is a mix of concepts, formulas, rules, taxation, etc., which can seem very complex when you read them all together. The approach I took was to de-jargonise the information by using everyday English as much as possible, to avoid the use of complex terms, formulas, etc., and to structure every investment option in a similar way so that it becomes easier for people to understand. My aim was to make it so simple that anyone with a basic school education should be able to understand the investments explained in the book.
What are some common misconceptions about investing that you frequently encounter, and how does your book address them?
There are two main sets of pre-conceived notions that people have. The first set believes that they can never understand investing no matter how it is presented to them. They will be otherwise successful in almost everything they do. But the moment it comes to managing their money, they seem to have a mind block that prevents them from being successful. The second set of people believe they know everything there is to know about investing. This is unlikely, unless you belong to this field or have been actively involved in a professional capacity. To both sets of people, my answer is the same: read a sample chapter, check out the details of at least one investment option explained in the book, and you’ll know that it’s not rocket science but at the same time, you should know enough before you take an investment decision.
In the context of the current economic climate in India, which investment schemes do you believe offer the best balance of risk and return for new investors?
For me mutual funds are the all-weather investment option. You just have to move your funds from debt to equity and a mix of these to get the best returns in the long run. To balance this, you should have some portion of your investments in gold and real estate (again through mutual funds instead of directly investing crores in property).
Your book emphasizes the importance of financial literacy. What steps do you think individuals and institutions should take to improve financial literacy in India?
Begin from schools. Reach out to new employees in offices. Both these should be made mandatory so that people start their financial journey in the right way. If institutions can have a free helpline to address financial queries, that can be a great help I feel.
This is the 6th edition of the book. Why so many editions and why do you feel the need to update the book from time to time?
The world of investing keeps changing rapidly. Ever so often, existing schemes get tweaked by the government or the institutions managing them; new rules get framed; taxation changes; new investment options become popular while older ones fade away. If someone needs to keep abreast of these changes, they cannot rely on a book that was written long back. While the concepts of the schemes covered will remain the same, many of the details associated with that scheme would have changed for a reader to take decisions based on them. I have consciously decided to update my book every two to three years as by then many changes do happen. Anything less will be too frequent a change. Anything more may mean that people are getting information that might be dated.
What do you see as the biggest challenges facing Indian investors today, and how can they navigate these challenges effectively?
Too many get-rich-quick schemes. Too many exciting bits of information being shared by influencers without sharing the complete picture, especially the risks associated with these schemes. People are also a bit impatient and do not have a long-term understanding of investing. Creating substantial wealth; wealth that can transform your life, takes time. It cannot be achieved overnight by investing in that one great scheme. Sure, some people do get lucky – but that is the exception. You cannot bank your future on being able to repeat that. The probability of that happening is just too low. Instead, there are fail-sure methods to invest if you see the history of investing. Unless something catastrophic happens, these methods of investing will help you achieve the life you deserve. But you need to learn, be patient, and let your investments grow.
Looking ahead, do you have plans for any future books or projects related to personal finance and investing? If so, can you give us a glimpse of what to expect?
Yes, definitely. I feel there is so much to share in this field. I’m also planning a book on investing for college students and senior citizens who have retired.