Money playbook: A useful guide to financial planning: Financial Express 17th December 2023

 

Running an online portal, they have a lot of information on the visitors to the site, which helps in putting down a structured template.

The Bee, The Beetle and the Money Bug: Adhil Shetty, AR Hemant, Rupa Publications

When it comes to saving and investing, one normally becomes serious only at later stages in life. And when one gets down to doing so, there could be a muddle when one reads about what to do while perusing columns by experts in the media. There is a plethora of advice given in bits that can confuse rather than help in taking decisions. This is where Adhil Shetty’s book, The Bee, the Beetle and the Money Bug, is useful, as it tells you all in a simplified and logical manner.

This book is a step-by-step account on how one should plan our financial lives, and the direction given is quite rudimentary and straight forward. Shetty is the founder of BankBazaar and hence has knowledge and experience in this field. Hemant is the head of communications in BankBazaar. Running an online portal, they have a lot of information on the visitors to the site, which helps in putting down a structured template.

They work on the basis of the ‘5S pyramid’. The pyramid structure has five elements and while they do suggest that we start from the bottom, one can start from anywhere and probably also follow a couple of steps at a time. It all depends on one’s inclination and ability. The idea is to have a blend of savings and investments that allow one to live a comfortable life with enough to fall back on either when one stops working or is laid off from work, which is quite common these days.

The five elements are clubbed under the following—save, secure, savour, strengthen and serenity. As can be seen, it makes a lot of sense to start from the first step and then move upwards purely from the point of view of affordability. While they are targeting the younger crowd, this approach would be useful for anyone who has not planned their finances. Hence, it is never too late to start.

The first step relates to savings where one can choose various options. Logically, when one looks at safety the first thing that comes to mind are fixed deposits and liquid mutual funds. These are useful in both building a corpus as well as having access to liquidity in times of a temporary crisis.

The second step is what they call the need to be secure. Here they talk of both physical as well as financial security. The financial security comes from insurance and they provide tips about what kind and quantum of insurance one must take. This holds for both life and health. Normally one gets covered by the company in which one works for health insurance and ideally should be used before dipping into one’s own insurance policy. This is to ensure that one keeps getting the bonuses coming which can be lost in case one uses the policy. Life insurance is also advocated not just from the point of view of death, which is the main aim of such covers, but also to provide for long-term contingency which can be education or marriage of children. Here they also club in vehicles, which is what one normally aspires for at an early stage in career.

The third step, which is called ‘savour’, is more to do with living a good life. Here they talk of getting into debt but in a measured way. Credit cards and loans are what they allude to. But there are warnings given along the way so that one does not get reckless. Should one have a single credit card or multiple cards? How much debt can one take in the form of a loan relative to earnings? These are the questions where they provide answers. They also point to the fine print in credit card usage as the interest rates charged are very high.

At the fourth stage they talk of strengthening the portfolio which goes back to asset creation. Houses have an advantage in terms of always appreciating unlike vehicles which depreciate over time. This will also take one closer to feeling more secure once there is a place to stay. Here they also talk of how to do cogent tax planning as one needs to know about all the laws so as to maximise net income. However, now with the new tax regime virtually dominating the structure, these avenues may be less attractive. There is some discussion on relative returns on various alternatives. Systematic withdrawal schemes hence also become useful at this stage in life just like the systematic investment schemes (SIPs) when one was in the middle of the career.

The last block for them is what they call serenity where one moves towards being debt free by the time one retires. This makes imminent sense as one cannot service debt when one does not have a stream of income. Here they talk of the value of pension schemes which one would have taken while in service. And as we come to this final stage of life there is also the need for having a will to ensure that things are smooth for the next generation.

These steps are well articulated and the tips provided are meaningful. BankBazaar has maximum visits from the youth in the age group of 22-35 years, but this playbook will hold for anyone who has not yet considered the future from the point of view of financial planning. This guide book will definitely be useful to anyone who is wondering how to go about this process.

RBI sends strong message against lending exuberance : Financial Express 9th December 2023

 

Of coffee talks and career paths: Review of my book Corporate Quirks in Financial Express, 10th December 2023

 

Neatly divided into chapters, which are further subdivided into sections, the book takes the reader on a fascinating journey of the corporate world, albeit on its quirkier side, as the author recounts observations and anecdotes based on personal experiences.

n his new book, ‘accidental’ economist Madan Sabnavis paints an insider’s picture of the cutthroat corporate world, outlining the written and unwritten rules of the game

Title: Corporate Quirks: The Darker Side of the Sun
Author: Madan Sabnavis
Publisher: KBI Publishers

It may take years to truly comprehend and digest the cutthroat corporate world, but trust Madan Sabnavis to make it a breeze, and the effort worthwhile, in his new book Corporate Quirks: The Darker Side of the Sun. Whether you are a fresh graduate trying to figure out everything on your own or a highly-valued professional excelling in your career, the book has as much of an aha moment for everyone as it has familiar undertones even for somebody working in the sector for just three to four years.

Neatly divided into chapters, which are further subdivided into sections, the book takes the reader on a fascinating journey of the corporate world, albeit on its quirkier side, as the author recounts observations and anecdotes based on personal experiences. That the ‘accidental’ economist—as he himself admits he became one due to his “inability to open other career doors”—has been in the sector for 36 years, of which 35 were in the private sector, helped in providing the “raw materials” for the book.

What does the entry into the world of St Corporate look like? How is the corporate world structured? What are its dynamics? Through detailed emotio-nal—though satirical—sketches, Sabnavis paints a vivid picture of the corporate world, outlining the written and unwritten rules of the game. He shines the ‘spotlight’ on the sector as he says: “‘tis not Hollywood but Corporate-wood”. His narrative on the ‘protagonists’ —the CEOs, CFOs, board of directors, colleagues, consultants, etc—makes it a ‘movie’ worth ‘binge-watching’ on.

The section on ‘coffee machine’, however, takes the cake. According to the author, a coffee machine is not just a dispenser of the popular and stimulating beverage. “It is a critical point of contact with colleagues who forget their departments and designations when they congregate here. It is the hot seat for sharing gossip and malice, which used to be done hitherto only in the rest rooms… the coffee vending machine is not just a refreshment machine but an entire congregation of bonhomie and camaraderie, which is otherwise not visible in the company,” he writes.

All the chapters and sections therein open with one-liners that clearly point the reader towards the direction that they are headed. But I would like to call them ‘punch’ lines, quite literally, as they hit you with the reality that exists otherwise. For example, for the section on ‘career progression’, he writes: “Don’t be irreplaceable. If you can’t be replaced, you can’t be promoted.” In a similar manner, he starts the passage on ‘compensation’ with: “As long as my company pretends my salary is high, I’ll pretend that I have a lot of work to do.”

However, Sabnavis clarifies that while the book brings out the darker or quirkier side of the corporate world, it does not take away any credit from how it has contributed to the nation’s progress. “In fact, it would be presumptuous to even think of questioning the accolades earned by the corporate leaders… But the quirkier sides exist and can amuse the reader,” he writes. This is the spirit in which the essays should be read, he adds.

The author saves the best for the last with what he calls the ‘corporate lexicon’. To put it in simple words, you say something, but you actually mean something else. These are phrases that you would hear in every company, your position or job profile notwithstanding. For instance, ‘I want you to think’ would translate into ‘I am not going to do this and it is your job to do it’ or ‘we should discuss it again next time’ implying ‘I am tired and bored’. Similarly, ‘we should work as a team’ would mean ‘I am your boss and will be a free rider’.

Sabnavis ends the book with a refresher on corporate tenets that are never to be forgotten. We all know about laws that concern the management of the company. But as an individual, writes the author, “there are unwritten, non-enforceable and practiced laws that you need to know… to survive and succeed in this grand world”. These include practising and mastering the art of making excuses, pleasing your boss, studying the HR rules carefully and ensuring you know how the system works, and so on.

Corporate Quirks is the kind of stuff that you would like to read when you are in the mood for something serious yet light, hard-hitting yet entertaining, as you take a break from crunching numbers and making PowerPoint presentations, or simply waiting to make your next career move.

Stock Market Peaks As Optimism Continues: Free Press Journal 9th December 2023

 

It has been seen that over time, households are becoming savvier when it comes to dealing with their savings. There has been a tendency to move to avenues where returns are better. Mutual funds are preferred by those who would rather not have to analyse patterns of single stocks.

The level of enthusiasm in the market can be gauged by the movements in the stock indices, and the rise witnessed of late has been phenomenal. In a way this reinforces the high level of optimism which is pervading the economy. Based on the reaction of market players this can be expected to persist in future too. But why has there been this sudden jump in the market?

The unexpected GDP growth

The leading factor has been the better than expected GDP growth numbers for the second quarter at 7.6%. The RBI has been indicating for quite some time that there would be a pleasant surprise for the economy in terms of this growth number. With this high number being driven by the manufacturing sector in particular, the mood has been boosted. In a way, it has been tautological because GDP is defined as value added which in turn is a sum of profits and salary bill. Hence high growth in GDP in manufacturing was due to high growth in profits which is already known and should have driven the market once the results were out. Clearly, the consolidated picture of GDP has been more potent than the micro numbers coming out in the months of October and November. The RBI’s forecast for growth this year has been upped by 50 bps to 7% which will be only marginally lower than the 7.2% witnessed in FY23.

Second, the results of the state elections can be considered to be a major booster for the market. The clear success of the NDA has rung the right note not because of the government at the centre making big gains, but being a reflection of what could happen in 2024 when the general elections are held. The final word on any successful policy framework is given by the electorate. The fact that three of the four major states have voted for the NDA is a vindication of the success of the ruling government and has been extrapolated to guide the results in the general elections too.

Corporate actions rely on certainty

This is significant because a lot of corporate actions are based on certainty in the policy environment. With this being a signal for continuity, the market has taken heart that private investment will continue unhindered and probably recommence in full swing even before the elections take place.

Third, there have been positive FPI flows into this segment which could be due to the other two factors. Also, the fact that the Fed will not be increasing the rates from hereon is a signal that funds flows to emerging economies would continue. This means that the pace of flow will increase and this is something that can continue through the end of the financial year. Also, it has been noticed that there is no longer a pattern of FPIs selling off in the last month of the year to book profits to pay their customers, which is encouraging.

A buoyant secondary market is evidently good for investors who are able to make money on their investments. But there are two other collateral benefits from a buoyant secondary market. The first is that there is a direct bearing on the IPO issuances as higher valuations are a precondition for companies to raise capital at this point in time. With stock prices high in the market there will be incentive for companies to fulfil their plans. This will be useful for the government in particular in case there are any disinvestment cases in the pipeline. As there is considerable slack on this front so far during the year, this buoyancy can provide an opportunity to the government to expedite the process. Hence the market will be looking out for such announcements for sure.

The mutual fund industry

The other benefit is for the mutual fund industry. It has been seen that over time, households are becoming savvier when it comes to dealing with their savings. There has been a tendency to move to avenues where returns are better. Mutual funds are preferred by those who would rather not have to analyse patterns of single stocks. With debt mutual funds already becoming less attractive due to the withdrawal of the capital gains tax benefit, one may expect more funds to move to the equity and hybrid schemes. This is good for the mutual funds industry though it would mean migration away from bank deposits on an incremental basis.

It may be recollected that in FY23 households moved their savings away from bank deposits to capital market instruments where the rewards were higher even though the risk involved was commensurate with the returns. The RBI did increase the repo rate last year and banks did see some migration back to deposits. But the deposit rates have almost peaked for most banks which are conscious of a possible turnaround in deposit rates. A result has been that they have increased interest rates on deposits with a shorter tenure of less than 2 years or slightly higher than one year. Under these conditions there can be a preference for the market as seen by a sharp increase in AUMs with mutual funds.

This could be a good omen

Stock markets across the world have behaved in a different manner compared with the growth tendencies witnessed in the developed countries. This can be because of the peaking of the interest rate cycle and a softer landing for these economies compared to what was prophesised earlier. The fallout will be more primary issuances that will translate to higher capital investment, something which has been lagging in the last few years. Therefore, this may be a good signal of the state of things to come. The RBI’s outlook in the policy announced yesterday points in the same direction.

With rates likely on hold listen to the commentary: Mint 6th december 2023

 

Ambiguities in Q2-GDP numbers: Business Line 5th December 2023

 

Book Review: Madan Sabnavis's 'Corporate Quirks': A Zany Look At A White-Collar World: Free Press Journal: December 2nd 2023

 If it’s going to be quirky, it must be written by an off-beat author, right? Well, Madan Sabnavis – whose regular columns on finance you may be following on the Editorial page of the FPJ — is described as an “accidental” economist, who became one due to his inability to open other career doors! Accidentally though it may be, he has been a corporate economist for 36 years now, and it is his wide-ranging experiences in this sector, coupled with his knack of seeing the wacky side of things, which have resulted in this entertaining book.

Readers who are in the midst of the corporate jungle might find many of the passages and anecdotes familiar; that’s because some of these are universal, applicable to CEOs and bosses mostly everywhere. Moreover, while the “quirks” are amusing, what Sabnavis writes about are actually serious things, which will probably resonate with most people.

Did you think meetings and strategies are boring chores? Check out the ‘Humdrums of Corporate Life chapter where you will find that “A meeting is an event where the minutes are kept and the hours are lost”. Get the gist?

It’s not all jokes and fun, though the reading is consistently enjoyable. Sabnavis comments, bringing to bear his experiences and world view, on aspects of corporate life that may have intrigued or even bothered some of you. Talking about subjects like career progression, sycophancy, “best practices”, even retirement... Reading chapter after chapter you might feel as if you are having an informal chat with one who can see both sides of the coin, and advise you on them too.

Because, of course, in the corporate world there are the bosses and there are the employees... and sometimes they even meet! In light of the bigger picture, however, everyone is merely a player on the stage of (corporate) life. And it’s the stories that link these personalities which put the quirks into the corporate, skilfully drawn out by Sabnavis.