TLDR;
This podcast features Radhika Gupta, MD and CEO of Adelwise AMC, discussing personal finance, investments, and her book "Mango Millionaire." She shares insights on approaching money matters, the importance of open financial conversations, and strategies for managing expenses and investments. Gupta also touches on the influence of social media on financial decisions, the concept of good and bad debt, and her experiences on Shark Tank India.
- Open financial conversations are essential within families.
- Differentiate between good debt (asset-building) and bad debt (lifestyle expenses).
- Investment decisions should align with personal risk appetite and financial goals.
Introduction [0:00]
Radhika Gupta, MD and CEO of Adelwise AMC, discusses her book "Mango Millionaire" and its reception. She highlights the importance of approachable, jargon-free financial advice and the need to avoid fear-mongering in financial services. Gupta emphasizes that financial conversations should be open and fun, like having chai, to encourage learning and engagement.
The New Middle Class and Social Media Influence [4:09]
Radhika Gupta addresses a viral LinkedIn post claiming that a ₹70 lakh annual salary is the new middle class. She clarifies that this income level is actually upper class, with the true middle class earning between ₹6 to 8 lakh annually. Gupta discusses how social media exaggerates the conflict between saving and spending, driving people to make risky financial decisions to keep up with perceived standards. She shares stories of individuals losing significant amounts of money in F&O trading due to social media-induced pressure.
EMIs and Debt Management [8:21]
Gupta addresses the trend of rising EMI burdens, with up to 61% of income being spent on EMIs. She distinguishes between good debt, which builds assets like education or a home, and bad debt, used for lifestyle expenses. She warns against using debt for unaffordable wants and highlights the importance of managing EMIs to avoid financial stress. Gupta also mentions that 7 out of 10 iPhones are funded via loan, and one out of three weddings are funded via a loan.
The 50/30/20 Rule and Savings Framework [12:10]
Gupta questions the 50/30/20 rule (needs, wants, savings) from an Indian perspective, suggesting it may not be adequate due to the lack of a strong social security system. She proposes an age-based savings framework: 10% in your 20s, 30% in your 30s, and 50% by your 40s to avoid a retirement crisis.
Managing Expenses as a Couple [15:00]
Gupta shares how she and her husband manage their finances, emphasizing independence, collaboration, and transparency. They maintain individual accounts and a joint account for home expenses. They both know each other's corpus and have individual investment policy statements. They review their finances quarterly and plan discretionary expenses annually, investing the rest in monthly SIPs.
Investment Policy and Risk Appetite [17:40]
Gupta discusses the differences in investment approaches between her and her husband, primarily due to risk appetite. While they share common principles like valuing transparency and liquidity, Gupta is more inclined towards unlisted investments due to her involvement with Shark Tank.
SIPs and Mutual Funds [19:15]
Gupta defends SIPs (Systematic Investment Plans) as long-term investment tools, not for immediate profit. She explains that SIPs are effective in down markets and automate the investment process. She cites statistics showing that even in the worst-case scenarios, 10-year SIP returns have been positive.
Selecting Mutual Funds [21:08]
Gupta shares her parameters for selecting mutual funds, emphasizing trust in the asset management company and examining the fund's portfolio. She looks at factors like diversification, value versus growth orientation, and alignment with the fund's stated objectives. She also focuses on the five-year rolling return as a key performance metric and doesn't rebalance anything before 3 years.
Smart Beta and Hybrid Funds [24:39]
Gupta expresses her liking for smart beta funds, which offer rule-based exposure to specific factors, and hybrid funds, which blend equity, debt, and gold. She suggests that hybrid funds can cater to different risk appetites and use cases, such as equity savings funds for conservative investors.
Number of Mutual Funds and New Mutual Fund Class: SIFs [26:33]
Gupta recommends holding 8 to 12 mutual funds, diversified across equity, international, and debt categories. She also discusses the new category of Specialized Investment Funds (SIFs), which offer more flexibility than traditional mutual funds but with a lower ticket size than PMS and AIF. She believes SIFs will coexist with mutual funds and potentially draw flows from PMS and AIF.
Asset Classes to Avoid [30:34]
Gupta states that she avoids real estate outside of a primary home due to illiquidity and lack of transparency. She also avoids cryptocurrencies because she doesn't understand them well enough and they are not yet fully regulated in India.
Financial Mistakes and Learnings [32:08]
Gupta shares her past financial mistakes, including rushing into investment decisions and not diversifying her portfolio. She emphasizes the importance of having a financial plan, considering risk appetite, and maintaining a contingency fund. She also advises against letting any single investment dominate your portfolio and stresses the importance of conviction in a business model over price when investing in equities.
Learnings from Shark Tank [36:31]
Gupta discusses her learnings from being on Shark Tank India, including the importance of instinct in investment decisions. She notes that the show requires making quick decisions with limited data, enhancing her consumer and business instincts. She also highlights the emergence of new business categories in India and the value of learning from other entrepreneurs.
Rapid Fire Round [40:51]
In a rapid-fire round, Gupta reveals her favorite holiday destinations (Italy, Maldives, Japan, and Meghalaya), dream dinner companions (Nandan Nilekani and Shah Rukh Khan), and a recommended finance book ("Nudge"). She admires investors who stick to their convictions and prefers diamond jewelry over gold. Gupta also favors debt mutual funds over FDs for their liquidity and identifies herself as the more frugal member of her family, emphasizing that leadership is learned through hard work.
Advice for Content Creators [45:50]
Gupta advises content creators, especially those in finance, to use their power responsibly and create reasonable, non-sensational content. She emphasizes that education is a service and should be approached with that mindset.