‘Investing is a Plan, Not a Product’: Career Chat with Priyanka Bhatia

Priyanka Bhatia, the co-founder of One Tree Spaces, a wealth creation business that caters to women, sheds light on women, money and why money matters should matter.

Women and money: Traditionally, women had not to handle money. In fact, there is a strong bias against them actually managing money so without this skill I find a lot of women groping for tips and answers but they are not aware that this requires rigorous discipline. This is the first time in India’s history that women are participating in such large numbers in the workforce. They have some guidance but there is a long way to go. One of the things that I would recommend is reading and talking with other successful women and business people and pick up as much information as possible in the first step.

Getting started. Here is a free link on how to start: Financial Freedom Reality Check Template. You can work on these sheets or call/email me, if you would like to work on the sheets for free with me.

Budgeting. This is a separate exercise. It does help to save, but investing is a different game. You need to look at your current financial situation, and your life goals, and risk-taking capacity to build a plan and then look at instruments that can give you good returns.

Idle cash. Keeping the cash idle (in savings accounts) is a complete NO as inflation and taxes eat into it. Recurring deposits are good, if they fit into a plan. The rates of return on RDs are much less when compared to other investment instruments. If you are investing in RDs without any goal in mind, it is better that you invest them in SIPs for some equity or debt mutual fund, depending on your risk taking capacity.

How to invest. Investing is a plan, and not a product. You need to work from your life goals, turn them into financial goals and work out a planned portfolio for investing. If you do not have deep domain knowledge of investment, my recommendation is do not settle from tips from resource centres. Do not invest without a planned portfolio.

Where to invest. This depends completely on your life goals and risk-taking capacity. If you can take a lot of risk and if age is on your side, you may go for equity. However, mutual funds are safe. FDs are good only for maintaining a contingency fund as you lose on the value of your money when you invest them in FDs.

Finances bore you? You need to develop the skills to create wealth and be financially free. Observations and instincts can take you a little far. Ultimately, you need to create a plan and follow it through. I know investment plans are boring to follow, but the results are fantastic. I have never met a financial free person from tips and observations.

Saving is not enough. Savings tend to erode value of money. Put Rs. 100 in a fixed deposit for 1 year @ interest 9%. Subtract 7% for inflation. Subtract taxes on interest earned and in just a year’s time, your money reduces in value. Try out the math on the amount you have in your savings account. Smart? I didn’t think you’d think so either. An amount as cash in hand and cash in bank should be maintained to meet current expenses and deal with any contingencies. This is good to give you a backup to manage your immediate expenses. For building a financial foundation and create wealth, I do not recommend savings.

Staying safe.  In this volatile financial scenario, you need to invest in instruments which are safe and give you maximum returns to ultimately reach your goals of children’s education, vacation, retirement, house, etc. You need to develop skills to protect yourself and an ability to change with the changing times. At the moment, debt instruments are the best to invest in. But, first, answer these questions for speeding your wealth creation process.http://www.scribd.com/doc/126017230/7-questions-for-financial-roadmap

Make finances a top priority. Ask yourself: Do you want to continue to work for money? Or, do you want to be free to do whatever you like and supported by your investments? Investments have two purposes 1. Build financial security, and 2. Create wealth. For being financially secure, invest in FDs, RDs, Savings account, PPF and post office savings. To create wealth and be financially free – talk with an expert.