Women & Wealth – By Financial Artists & KurNiv Success Solutions

A Financial Wellness Workshop conducted by

Maher Dhamodiwala from Financial Artists ( Financial Planner )

Freyaz Shroff from KurNiv Success Solutions ( Life Coach )

on 23rd May 2015 at Naidu Hall, CCI

DSP Black Rock released a survey that found that one in four women don’t take part in their financial decision-making – at all. And because 90 percent of women will be responsible for their finances at some point in their lives (due to events like divorce or outliving a spouse), financial planning should be a priority.

Women being more emotional and nurturing by instinct tend to be risk averse which keeps them away from taking bold financial decisions. The workshop discussed the shortcomings of keeping away from mutual funds and equity and what are the financial risks one has to bear for refusing to come out of the shell.

The role of inflation is generally not considered in financial planning, however the truth is, it is one of the primary deciding factors in your investment.

Although women feel confused or lost with discussions on stock market, the truth is they are perfect for being a sound investor. The reason being women investors bring to the table a stable and long- term approach towards investing. They tend to take a holistic approach and put things like children’s education ahead of their own goals. Lastly, once they understand the nuances of long-term investing, they are less bothered by short-term events. They can surprise themselves by the stable dimension they can lend to their family’s financial plan as they always think long term.

The workshop emphasized on the benefits of delayed gratification by showing some simple yet powerful examples. One of the winning examples was the principle of Jelly. If one wants to savor the taste of Jelly, one should have the discipline to allow it to solidify, the same goes for a sound investment plan.

However our conditioning makes us believe that a constant state of euphoria co-exists with investments. However, the truth is that, the only way to achieve your financial goals is by self control and discipline. In a euphoric state, you may either over achieve or under achieve but a balanced, long term plan makes you stable and stronger by each passing year.

The most interesting part of the workshop was the clarity with which the fundamentals of mind and money were explained. Some of the powerful fundamentals discussed were:

  1. Power of Compounding.

It helps your savings grow even faster. That’s because you’re earning interest on the money you’re saving, plus you’re earning interest on the interest. Money’s ability to compound is of one its’ most intriguing and beneficial features.

For eg . If you can visualize a huge orchard of mango tree, filled with fruits and flowers which all started from one mango seed. This is exactly the principle on which power of compounding work.

  1. Systematic Investment Plan (SIP)

No river flow can ever be turned into electricity until it is tunneled. No man has ever achieved any greatness without being disciplined.

SIP is a smart financial planning tool that helps you to create wealth by investing small sums of money every month, over a period of time and the best part is you need not understand the share market or be bothered by global financial trends or politics. All you need is discipline.

For eg : Maher spoke about how he has a perfect plan for his daughter Mahira by starting a SIP the very month she was born. This will enable Maher to provide her with quality education and a extravagant marriage as it would already be around 20 yrs of systematically investing for future by then.

  1. Asset Allocation

A good financial portfolio is defined by “Balance”. Generally speaking, stocks provide more long-term growth, but they can be volatile. Bonds, on the other hand, tend to be more stable but offer relatively little growth. Cash, FD’s and gold offer little risk but also little return.

There is a famous saying, “Don’t put all the eggs in one basket”..which means, if the eggs are at a risk due to a natural calamity or a predator, a few would always remain safe if they were at a different location. Asset allocation is just like hiding the eggs in different location from time to time after understanding the risks in the environment.

It is balancing between debts and equity. When either markets (equity or debt) are cheap we tend to increase that asset’s allocation. Reviewing the portfolio every year and adjusting it as per your goals and market trends is what makes it dynamic and sustainable over a period of time.

As global trends in every aspect of life and living are changing across the world, we at Financial Artist and KurNiv Success Solutions urge women to empower themselves financially and believe in themselves that they are perfectly capable of taking accurate sound long term financial decisions.

Woman take control of your finances!

Gulshan and Anahita were very excited to travel to Mumbai to attend their uncle Adils house warming party.  After all, it had been a couple of years since they had met up with uncle Adil. Gulshan, now 40 years old had just delivered her second kid, a baby boy a year back. Anahita was 32, single and was posted in Singapore for the last couple of years by her software company on an assignment. Both had fond memories of having spent time with Uncle Adil, in their childhood days, before Adil was transferred to Mumbai.

Adil, a chartered account by profession served throughout his career in a government run oil marketing company and had a year to go before he retired. On the sisters agenda was also to take some advice on managing their finances, knowing very well that Adil had managed his personnel finances well. Adil worked on a financial plan and used mutual funds to build a big corpus to take care of his retirement needs. Within the family, whenever it came to investment, Adil was consulted by one and all.

The housewarming party went on well, with close to 100 guests and friends in attendance, many admiring Adil’s new house neatly done in the central suburbs. Post the party, with the guests gone off, and close family members seated for dinner, Adil had some advice for his niece. Given today’s environment he explained how it was very important for women to understand financial planning and start taking their independent financial decisions.

.They either do nothing with their money or left the decision to a close family member like their brother, spouse or father.  Some who do invest do it randomly in gold, real estate or fixed deposits without any planning or caring about their liquidity requirements. He cited a Blackrock survery which suggested that women are less prepared when it comes to saving for their retirement as compared to men, and asked his niece to take steps so that they are better planned.

Women have a higher life expectancy as compared to men. An average Indian woman lived three years more than her male counterpart. While the life expectancy at birth for women was 67.7 years, for men it stood at 64.6 years. Adil

Women have less savings as compared to men because they take breaks. In the case of Gulshan, she had shifted from Mumbai to Ahmedabad when she got married, so getting a new job meant taking a break of 6 months. Then when her kids were born, each time she took a break of 2 years each. All this results in woman having less savings as compared to men. For example, only about half of women age 25 to 44 are working full-time, compared with more than three -quarters of men that age. Many times due to higher family responsibilities, some women work part time or they work from home which impacts their savings. The very fact that women have a higher life expectancy and that they will outlivemen means they need to plan and understand their finances. Merely keeping money in a savings bank account which earns 4% may not help beat inflation and grow their money.

Women  need to be prepared for untoward situations like untimely death of a spouse or a separation. Such situations put women in  awkward situations. Adil explained that at such times besides facing the sudden shock woman have to take their own financial decisions. Merely listening to outsiders, may add to the confusion as they too may have vested interests.

Woman are averse to taking risk, as per the Blackrock survey. The survey revealed that close to half of men (45%) are willing to take on a high risk in order to achieve a good return on investment, while in the case of woman the number was a mere 28%. The survey also revealed that women investors keep a large proportion of their investments (68%) in cash or bank savings account, compared to 59% for men. With age on their side, he suggested that they tuck aside small sums of money into equity mutual funds. Small amounts of savings in an equity mutual fund, through a systematic investment plan (SIP) every month, would go a long way in building a corpus, which could be used for their retirement needs or for other goals like their kids marriage or even a foreign vacation. For example, an SIP of Rs 5000 per month in an equity mutual fund for 15 years, that will generate 12% returns could help them build up a corpus of Rs 30.8 lakhs.  Both Gulshan and Anahita promised uncle Adil that would take care of their finances.

Maher Dhamodiwala runs Financial Artists, a Financial planning Firm. You can reach him  at: maher.d@financialartists.in

I am 45 years old and have 15 years to retire. will retire by the age of 60. At present, I have around 10% of my savings in equity, with the balance in fixed income. Since I will be retiring in another 15 years, should I increase my equity fund allocation? If so, what are the kinds of MFs that I should invest in?

At present, you are investing only 10% of your money in equity-oriented instruments. This is insufficient to meet your goals. At 45 years of age and with 15 years more to go for retirement, you still have an opportunity to restructure your portfolio to build a good retirement fund. Your current asset allocation suggests you have a conservative outlook towards investing, hence move to a 60:40 allocation between equities and debt instruments (including fixed deposits, debt mutual funds, and others). You are investing in diversified funds across market segments, and that is good. Please maintain this asset allocation pattern with annual reviews and rebalancing for the next 10 years.

At that point, consult a financial adviser to figure out how to restructure your portfolio over the next five years to balance between safety and growth.

To know more about it..

Join us for a Financial Wellness Worksop presented by Jam-e- Jamshed by Maher Dhamodiwala of Financial Artists – A certified financial planner and AMFI ( Association of Mutual Fund in India ) trainer and a Jam-e- Jamshed Columnist

Day & Date : Satuday, 23rd May 2015

Venue : Cricket Club of India ( CCI ), C.K. Naidu Hall, Churchgate, Mumbai

Time : 4 pm – 7 pm