Money Talk. ‘Love the companies before investing in them’

Many surveys indicate that a vast majority of women, even those financially independent, don’t make their own investment decisions. Reenita Malhotra Hora and Divya Vij are trying to change this through their book Money Smart - The Indian Woman’s Guide to Managing Wealth. The authors share their views with Business Line.

What are some of the common concerns of first-time women investors?

Reenita : Many women investors simply don't know where to begin. The idea of building wealth is enticing, but women consider ‘Finance’ the ‘F’ Word! So, get over that mindset.

Then list out your life goals so that you can quantify how much your desired lifestyle will cost.

What tips would you offer to a first-time woman investor?

Reenita : Make a list of your favourite companies and write down why you believe in them. I’ll explain this with two examples. In my early days of investing, I wanted to buy the stock of Starbucks.

My husband questioned me, but I was insistent — I loved the coffee and liked hanging out at the Starbucks outlets and I knew that there were thousands like me. I firmly believed that investing in Starbucks meant investing in a lifestyle that many people enjoy. So we bought the stock and it has been one of our best investments.

When the Facebook craze took the world by storm, I was very keen to purchase the stock. But, many investment analysts questioned, “Is the stock overvalued?” But all I could see was that everybody was on Facebook and there was no way that it would not do well. So, I bought the stock and held steadfast.

Divya: You must research and understand the product thoroughly. Also, even if you have a huge risk appetite, invest in a mix of risky and non-risky assets.

What according to you is the best way to invest in gold?

Reenita : Whatever you do, don't buy gold during Navratri and the festive season when the rest of the world is buying it!

If you are buying gold jewellery for your daughter’s marriage at a future date, avoid investing in finished jewellery. Instead, consider gold bricks or, better still, gold securities. Then, you can exit your investment anytime without losing out on jewellery-making charges.

Divya: Consider investing in gold ETF (exchange traded fund) which is like a mutual fund that invests in gold.

Your book talks of different investment strategies for women of different ages. Please share your views on this.

Reenita: A woman has different needs at different stages of her life. For instance, when I was single, I needed to earn enough only to pay my rent and living expenses, save a little bit and have some money to spend with friends.

I didn't have any big responsibilities and could afford to take more risk and reap high rewards in the long term. Once I got married, things changed drastically. There was a large household budget; my children’s medical and schooling expenses and family holidays. At this stage, I invested in stocks and also in some long term and relatively safer investments such as gold, property and bonds.

Today, my kids’ higher education is a big commitment for us and I need to ensure that I have a steady income from safe investments that will give me the choice to quit work.

Divya: Our book gives a generic direction on this based on the person’s age, requirements and risk appetite. It also depends on the person’s income.

For example, the post-retirement strategy for the elderly could be to go for safer investments. For a younger person who earns well, I would recommend a spread between risky and non- risky investments.

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