Last Updated : Sep 21, 2012 12:29 PM IST | Source: CNBC-TV18

Investment tips for women entrepreneurs

Most of us try to wear several hats. The struggle is to do it all at once. CNBC-TV18's panel consisting SP Tulsian and Gaurav Mashruwala help women entrepreneurs, who have worn several hats very successfully for a long period of time, with their investments and financial planning.

Most of us try to wear several hats. The struggle is to do it all at once. CNBC-TV18's panel consisting SP Tulsian and Gaurav Mashruwala help women entrepreneurs, who have worn several hats very successfully for a long period of time, with their investments and financial planning.

Investors are usually unsure how to decipher news flow and how to translate that into their investments. They also wonder whether this kind of investment planning is even advisable for equities.

Tulsian explains, "In the stock market, we always say, try to catch the news, which is expected to happen. Generally, whenever we see the news coming in, an amateur investor or maybe a first timer tries to play on that news. But the seasoned investor will try to buy on the rumour and sell on the news. I will advise all amateur investors to never play on the news the day it is broken because generally that is the time you will find that stock has matured, allow the stock to react either on the lower side or on the upper side."

If the stock has moved beyond maybe 5% or 10%, Tulsian advises to leave it and find other ideas. However, in his view, if it has corrected and if the news is investment worthy, which will have a long-term impact on the stock price and look to enter at that price. “Never get disheartened that the stock has corrected after the news. This means probably that news may not be worth going for investments, in fact, it can be used as an opportunity once the stock gets corrected.”

Everyone wants to save and invest money because of certain social responsibilities and dreams in lifeAccording to Gaurav Mashruwala, financial planning is all about channelising one’s resources towards these financial goals.

Pooja Pahuja Dhote, Ideas – The Prop Shop: I have been a very risky investor. When I used to drive down from my work, I used to see a hoarding of mutual fund and would invest money in it. It has worked for me because I felt I have made all these through my investments and savings from the last eight years. Now as I am ageing, I am a bit jittery. How do I invest and how do I follow the funds?

Tulsian: If you generally see the historic trend, three asset classes have really given us very good returns. First equity, second real estate, and third, I put it loosely as jewelry, not gold and silver. So, you have been very smart in making investments in jewelry. But if I focus purely on equity and real estate, I will put 60% of my investible fund into these two asset classes. If you really want to make some allocation for jewelry or may be in the bullions, that may be 15%.

25% of your investible fund should be into fixed return instruments like fixed deposits, tax saving instruments or may be bank fixed deposits, recurring deposits. In the Indian context, in the last two decades, inflation has been eating away your fixed returns. So, I don’t think that on a real term basis, you will get any kind of returns if you are not invested into equities and real estate.

Among mutual funds, go with the diversified mutual funds; don’t stick to any kind of thematic funds like IT, like pharma, like MNCs.

Radhika Khanna, Lotus Blossoms: I have been an entrepreneur for almost 20 years now. Since I started from home it wasn’t looked at too seriously, but when I became successful, everybody encouraged me to become more commercial, and so, I did. Money came in along with all that success. It was all money for jam because I was living with my in-laws. My husband had a job and this was like lovely pocket money coming in. I did put it into mutual funds by way of SIPs but they were all very small amounts. Jewelry was one of the places where I did put some money in. Now I feel unsatisfied with all that. I would like my money to be a little more productive. So, how do I consolidate? I have a 14-year-old daughter and I will need funds for her higher education and marriage after about 10 years. How should I plan for that?

Mashruwala: To begin with, you should plan your finances along with your spouse. A common mistake, which we have noticed is that with women entrepreneurs, the husband would be mentally prepared that he needs to get his daughter educated and he could be setting aside for the goal. Simultaneously, the wife could be doing it, and they would duplicate their efforts. It probably makes sense if one of them takes care of marriage expenditure while the other takes care of education expenditure.

That’s the first step. Once you do that, start looking at all the investments that have been made till date. First, compile all the documents, then, find out whether the fund is good enough or whether you should take money out and invest elsewhere.

Another problem is that people don’t review their investments. Normally from a planning perspective, I encourage to review investments once every quarter.

Sonam Modi, fashion designer, Sonam M: I deal into ethnic Indian wear and my main forte being bridal wear. I started my business four years back, one of my main starting points of my career was my launch at the Lakme Fashion Week in 2009. I would like to have my own flagship stores in the metros and mini metros of India. I have set myself a goal of 5-6 years for me to have this entire setup done. How should I use my profits to invest to realize my dream?

Mashruwala: One thing that you need to do is to take the money out of business and deploy it in a manner where it keeps growing. Invariably what we have seen with entrepreneurs is they keep deploying it back again in business. Business grows and they feel great but when they have to do something beyond business, there is no liquidity because all the money is ploughed back.

Since you are looking at about 5-6 years kind of horizon, if we are talking about large amount of money, you can start buying real estate slowly because that’s what you want to do. But if you are not talking about a corpus, which can help you buy, then look into equity and gold as asset classes because these asset classes will grow at a rate which is higher than inflation.

Now, where would you deploy? If you are unsure to deal in equity market or gold directly, then go for a mutual fund. If you can keep parking money on a regular basis, if you can do it on quarterly or even six monthly basis, start creating a corpus. At a point of time when you want to buy it, liquidating mutual fund is fairly easy; you get your money back within three to five working days on a higher side. Liquidate that money and use it.

Tulsian: You may find me contradicting Gaurav. Since she has a dream of expanding in metros and mini metros in the next four to five years, my advice will be that she will be forced to plough back whatever she earns from her business into her business again because you can really plan your requirements for maybe 15 years down the line after five years.

You have a very short span of five to six years and you have a target of at least starting 10 stores. For that, I will give you a combination, maybe one store should be owned while three stores should be on lease. Since you need to grow your income, you need to increase your asset’s investment also. So, for five years, I will advise you to deploy your entire money into your business.

Look for creating wealth in other asset classes like mutual funds or in gold, maybe in stocks five years down the line because you have a goal and a timeline of only five years to expand. Five years down the line, you may have competition; you may not be able to continue with the same pace, with the same margin. So I will advise you to focus for the first five years totally on your own business.

Shibani Jain, Baaya Design: What is your view against other investments vis-à-vis investment in art?

Mashruwala: Personally, I am not into investing in art. From an investment perspective, there isn’t enough amount of transparency in terms of pricing. Liquidity, at a future date, could also be an issue; also there could be storage issues. So there are a lot of concerns with art which doesn’t fit into an ideal kind of investment. Even regulation perspectives, if it’s an equity, you have SEBI regulates it, if you pick up a fixed deposit, RBI regulates it, art still isn’t well regulated. So, I am not too much in favour of art from investment perspective.

Aprajita Toor, We Desi: I am a manufacturer so I do regular amount of investment in my work. At the same time, I have a toddler who requires future investments. With zero knowledge in investments, I still want to understand how do I do investment, have it for my work at the same time do it for my daughter?

Mashruwala: It’s very tempting to keep ploughing money back in the business, but then, I tell people that if you are going to keep ploughing it back in business, three things shouldn’t happen. You shouldn’t fall ill, you shouldn’t retire and you shouldn’t die because if any of those things happen, will your family be able to take that money out and take care of themselves? So, in that case, keep taking it out on regular basis so that your business can grow at a very good rate; you could be making a lot of profit, but is it really useful when those responsibilities come up?

I would recommend to do an SIP because on a regular basis. You don’t have to spend lot of time analyzing it; only thing you should be be careful is when you make that investment, do it investment in your own name and mentally say it’s for my daughter.

There are times where people start doing it in their child’s name. But you may not want to give the control of the money to them at the age of 18.

I feel that equity is the best investment in your case because your daughter is very young. But the only caution or rider, which I will add with the equity is to go for the blue chip stocks and avoid the service industry stocks. You don’t know maybe a company, which is engaged into the services tomorrow may not be able to perform. So, I have always advocated for the brick-and-mortar kind of business.

Pinky Saraf, Pinky In the current market scenario, which are the best sectors to invest in?

Tulsian: I will advise you two sectors. One is banking finance and second is automobiles. Banking finance is always taken as the backbone of the economy and automobiles is always taken as the wheels of the economy. We all know that India will progress for the next 20 years. I I am not saying that after 20 years, we will not grow but probably we will taper off after that. So these are two sectors, which require a must presence for all investors.

Q: How does a lay investor find companies with a sector; should they go for large caps or blue chips or should they be adventurous enough and try something in the broader markets?

Tulsian: Always go with the best. Suppose if I am say automobiles, it has to be Maruti; if I say housing finance company, it has to be HDFC. If I am saying public sector bank, go with SBI. If I say private sector bank, go with ICICI Bank. The step is to choose the outperformer. For an initial investor or those who want to go with the safe stocks, go with the leader.

Anita Sawhney, Girish Kidarnath Opticals: Can you brief us on whom we should nominate and how we should go about it?

Mashruwala: In case of death, our assets would go to someone. Now, there are two prominent ways – one is that we could have written a will, and in a will, we have clearly mentioned who should get it. If will is not there then there is Indian Succession Act and Hindu law or Mohammedan law, whatever is applicable, but there is a step prior.

What is nomination? It means in case of one’s death, one can nominate who can get the money. Now that doesn’t mean the person can own it, ownership will happen. Sometime distinguish between the two and it will be a little complicated, I will simplify that with an example.

Assume a husband nominates his mother in a life insurance policy saying that upon my death, this should go to her. Death happens, husband has not made a will, money goes to the mother. But wife can sue saying that being a legitimate wife, she has a right under the Indian Succession Act. So, either will shall prevail. But prior to that, we do nomination so that immediately somebody gets money. So whatever investments that you do, ensure there is nomination. It is fairly easy. Nomination is a sure shot way that upon your death, there is somebody in the family who doesn’t have to go to court to get that asset, which you have created.

First Published on Sep 1, 2012 01:44 pm
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