Nov 27, 2012, 04.12 PM IST
Certified financial planner Gaurav Mashruwala suggested young career oriented women to invest in movable properties like gold, and equity as an asset class, however they should avoid immovable assets like real estate.
In an interview to CNBC-TV18 he said that they should keep one month's contingency reserve and also purchase a personal health insurance. "Ideally get into an investment or get into an asset class which is liquid and divisible," he further added.
Below is the edited script of his interview with CNBC-TV18"s Latha Ventakesh and Reema Tendulkar
Q: Over the past many years we have seen several young unmarried women getting into a career and are earning a good salary. What would you advice all these young women who are earning money, where should they be investing their income?
A: There are a few things they should keep in mind. They have no dependents i.e they could be living with their family, their own parents, so there aren’t any family expenses they need to incur. At such times, they should be taking some basic steps first and then the intense ones.
First they should keep aside one month’s contingency reserve. Whatever is their personal expense, they should keep that aside. Secondly, if their employer is not providing health insurance they then can purchase health insurance on their own.
Apart from that, if they have taken any loan - education loan or loan taken to pursue professional courses before starting their career then they may want to utilize this excess money to get rid of that loan as soon as possible.
As far as the intense steps are concerned, they can start considering investments. It so happens that many of these young women get into a situation whereby they straightaway jump into buying immovable property like real estate etc. I would encourage them to refrain from that because chances are that after marriage they may migrate to some other city, country and then that piece of real estate has to managed by their their parents.
They should pick up movable properties. Since there are no immediate goals they can look at gold, equity as an asset class. They can do it directly or choose mutual fund as a vehicle to put into these.
Many times it has been observed that either the father or brother is managing their finance and they trust them with it, which is fine, but they should also start taking interest in it. So, once they are married, they will be able to handle the wealth that has been created on their own or along with their spouse.
Otherwise, this entire investment is in their name, but it is the father who has been managing it and then when they get married, the transition becomes difficult. These are the few things they should keep in mind.
Q: I am a media professional living with my parents and drawing a comfortable salary. A large part of my salary is saved, so should I invest it in real estate or is investing in property a no-no?
A: From an asset class perspective, real estate is growth oriented. Over a longer period of time, it will grow well. What happens is that after marriage, if you have to migrate to another city then the entire maintenance of the property like the payment of property tax and if one has tenants - collection of rent etc becomes the parent's responsibility and then one may want to consider whether she wants to get into it or not.
After marriage, you may want to share financial responsibilities along with your husband and for that you need liquidity. You may want to buy another house, but there can be a case where you have already taken a loan on the first one. So, ideally get into an investment or asset class which is liquid and divisible.
If it is real estate and you need just portion of money then one can't liquidate half of that real estate or the house. One has to liquidate the entire property. So because of illiquidity and indivisibility, I normally don’t encourage investing in real estate.
Having said that, if those are not the concerns, then by all means pick up real estate because there are no dependents or financial commitments. Hence you may want to look at real estate from a long-term perspective. But look at these practical difficulties, consider them and then take an optimum call.
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