Mango Millionaires: The common man's guide to financial independence

Why for beginners financial independence is less about picking the right stocks and more about avoiding mistakes early on

Mango millionaire: Smart money management for a sweeter life

By Radhika Gupta with Niranjan Avasthi

Published by Macmillan Business

264 pages  ₹275

 

One of the burdens of being a high-profile chief executive officer of a mutual fund house — Radhika Gupta, one of the co-authors, heads Edelweiss Mutual Fund —is that people accost you with questions about investing everywhere — airports, marriage functions, and even in the market during saree shopping outings. What is dismaying is the nature of the questions they ask. They reflect a short-termism that is one of the root causes for investors floundering in the equity markets. 

“Should I invest in the Bank Nifty (or some stock) now?” Most people want tips. Very few pose questions such as: How can I build a portfolio for a medium-term goal, like buying a car or accumulating the down payment to buy a house? Or, how can I build a diversified, all-weather portfolio that can be held for the long term for goals such as my child’s education and my retirement? This book is an attempt by the authors to answer such critical questions and equip retail investors for lasting success. 

Ms Gupta and her co-author, Niranjan Avasthi, senior vice-president at the same fund house, begin by offering real-life examples to illustrate how a lack of financial acumen can prove ruinous. A friend of Ms Gupta lost her husband suddenly to a heart attack. After the grief came panic about her financial situation. A few financially savvy friends thankfully stepped in to sort out her finances. 

Mr Avasthi tells the tale of a friend who invested in a newly-launched cryptocurrency. As the token’s value soared, so did the friend’s confidence. Despite repeated warnings, he refused to book profits and diversify. His misplaced bravado had a tragic denouement: The token’s promoters performed the classic rug-pull, vanishing with investors’ funds. All that Mr Avasthi’s friend was left with were worthless tokens and regret. 

Though money is critical for keeping body and soul together, most people without a finance background avoid learning about managing their personal finances. Already burdened with the responsibilities of office and home, they view learning personal finance as an onerous chore. Besides, a lay investor faces many obstacles. Finfluencers who abound on social media are hard to trust. Books written by academics tend to be excruciatingly dense. Until recently, most investing tomes tended to be written by foreigners. While informative, such books often do not address the opportunities and challenges unique to investing in India, such as how to circumvent mis-selling. 

Many platforms have mushroomed that have made DIY (do-it-yourself) investing in equities easy. But owning a Porsche alone is not enough; it also needs to be driven well. Similarly, easy access to financial instruments does not always translate into good investment decisions in the absence of knowledge.    

With the Indian economy outpacing others, many young professionals earn handsome salaries early in their careers. But a high income does not guarantee wealth. While our parents’ generation lived by values like VFM (value for money) and SST (sasta, sundar, tikau), recent ones live by YOLO (you only live once). Dining out, foreign holidays, and shopping for branded goods often leave little for investing. 

The authors aim to help retail investors overcome these pitfalls. They offer a practical 10-30-50 framework for saving: save 10 per cent of income in the twenties; 30 per cent in the thirties; and 50 per cent thereafter, when incomes usually peak. They also advocate savings deducted at source (SDS): Set your SIP date early in the month so that a portion of your salary gets invested before it can be spent. 

In an age when availing of debt has become absurdly easy, many fall into a debt trap. A chapter is devoted to avoiding this pitfall. There is another on risk and return where concepts like risk tolerance and risk capacity are explained. The authors elaborate on how diversification and a long investment horizon can serve as an antidote to many risks. An overview of taxation comes next, followed by a chapter on insurance: Put your defences in place before sallying forth to invest. 

The authors also offer core insights on asset classes like real estate, gold, fixed income, and mutual funds. They round off by diving into topics like portfolio construction, handling behavioural biases, and finding the right financial advisor. 

The book’s simple style is meant to allow even non-finance readers to breeze through it. The constant stream of stories and anecdotes drawn from cinema and the lives of family members and friends keeps the reader engaged. 

More than knowing which stocks or mutual funds to invest in, beginners need holistic knowledge on how to manage their finances and avoid mistakes early on. Without guidance, developing such a perspective can take years. This book’s merit lies in offering that framework within a mere 264 pages. 

The book’s title, Mango Millionaires, is a clever play on the Hindi term aam janta. It offers the knowledge and toolkit that can put a layman on the path to wealth — not overnight, but steadily over time.