LINFOCITOS TOTALES

When I was in primary school, I had so many friends. Everyone would offer me something from his/her Tiffin (that’s a big thing in school). No one in the class got birthday invitations from all classmates. But I did. My birthday was attended by everyone I invited. I loved all the importance I was getting. I loved to act pricey at times. I thought I was very popular in school.

Then we advanced to a different secondary school. And everything changed. I was just another girl in the class. No special favors, no privileges. I was disheartened when no one turned up for my birthday party that year. All my classmates went for another boy‘s birthday that fell on the same day as mine. I cried badly that day. I would have been 10-11 years old. I complained to my parents about this behavior of my so-called friends. And I still remember what my father said in response. He said, ‘you did not invest in your friendship’. That was the first time I heard the word - ‘invest’. I didn’t make much sense of it then.

But my parents later explained that the favors in primary school came to me because my mother was our school principal. And even though I had this privilege and everyone’s attention early on, I did not capitalize on it. I had a plenty of friends then, but I did not ‘invest’ in their friendship. Instead, I sort of misused the privilege. I took it for granted. I believed that it would remain forever.

I acted pricey, poked fun at others and took undue advantage of the ‘friendships’.

The incidence lasted in my memory not as much for the embarrassment it created on my birthday, as for the lessons I learnt;

‘You need to ‘invest’ to be able to enjoy continued privileges.’ ‘Good times do not last forever.’

‘You are in better position to invest in good times, but you make the best investment efforts in your bad times.’ The last lesson has its roots in the efforts I put in later to become a good friend and build my friends’ trust in me. That’s when and how I learnt the importance of investing. How I learnt the actual process of investing is another interesting tale.

My first investment was in my provident fund, when I started my employment. That, because it was a

I Can—Mrs. Bharati’s Common Money Sense

Surprisingly, the most helpful investment learning I received was from a dietician friend of mine. Anu was my college friend who pursued profession as a dietician. She married Raj, a professor of commerce when she was just 20 years of age. They had a humble household income, almost half of ours. But they lived our equivalent lifestyle (theirs was better, they worked 9 to 5 while we slogged longer). The secret was their investments. The commerce professor—dietician duo had got their investment equation right and in Anu’s words, put their money to work too. Between the 3 of them i.e. the husband –wife and their money, they made earnings as much as us.

We decided to make Anu and Raj our investment gurus (at least to begin with). Anu, a dietician by passion had a very interesting analogy for investing, which anyone could relate to. She compared investing with cooking. According to her, human beings should eat a balanced diet customized to individual nutrient needs, right from childhood. The nutritional needs in the childhood are very different from that of working adults which are also different for the elderly.

Similarly, when young, your money needs ’growth’ aiding (nutrients) returns from investments. As it grows up with age and lifecycle stage, it would need a balance between growth and steady income investments. And as it matures, with you (around retirement), you’d need to give it a steady income first and then growth opportunities.

As you may not get all the required nourishment from a single food group, you’ll have to include in your menu, items from various food groups. Just the same, you’d do in case of investment. You’d create a ‘portfolio’ of investment that has items from different asset classes (like food groups) that can together give your money the nourishment it needs. I was amazed at the similarity.

Then Raj further explained the various investment channels and the kind of returns I could expect. Equity or stock related investments (shares or equity mutual funds) provide growth, while debt investments (FDs, Bonds, Debt mutual funds) offer a steady income potential. Investments in items of value (like gold, land, commodities), would provide my money security as they would inflationproof my money to a large extent and also have growth potential.

For beginners like me, he had a simple thumb rule for creating a balanced investment portfolio based on our age. Raj said that the equity component in my portfolio should not exceed (100 minus my age)% of my total investments. So for me (at 28 years), the rule guides that if my portfolio has equity in excess of 72%, then it needs to be balanced so as not to be risky. I can balance it by increasing my debt investment or decreasing (by selling some shares/mutual fund units) equity component.

I started with that guideline, and believe me this simple thumb rule is proving effective even now (at 43). It’s a long way I’ve come from that and have devised many a investing thumb rules for myself . But so effective is this ‘balancing the portfolio’ thumb rule that I have been practicing and sharing it with everyone—beginners or experts alike.

Whoever said that investing is complicated and difficult!

I’ve begun to believe that it’s as simple and as creative as cooking a balanced meal. What you need is some knowledge about the food groups (asset classes), some idea about the nutrients (risks and returns) and a good understanding about your nutritional needs (your investment needs). If you have this right, you are ready to dish out an investment portfolio. And while balancing risks, you can be creative with your investment portfolio and learn on the way. You may want to refer to experts and recipes too. Your search for that ‘ideal’ portfolio for you, may soon be over.

I Know – About Investing