“Uncle I am just starting my Articles for doing CA and since I get a stipend I wish to start saving Rs. 1000 a month”

It was a 19 year old girl who made this statement…and I was really impressed. So I had to take this conversation ahead.

First her background. Her parents are also savers and investors so this girl has heard words like mutual funds, sip, equity funds, risk, insurance, etc. Her father is also a CA and there are a few CAs in the family – which means investing, corporate finance, etc. is a part of the dinner / lunch table talk.

She had done some reading and wanted me to select a fund for me. I said ‘find your own fund’ but I will help you with 3 fund houses. She found her own fund, and that too was good. There is a far greater pleasure in teaching than in sales. So the learning had started on a good footing. I asked her what her goals were.

Her goals were very typical of a upper middle class kid. She wanted to go to an Ivy League college to do her MBA – but she would consider IIM A or ISB also. She knew it would cost her Rs. 100 lakhs if she were to do it abroad and she would fund it through dad funding, scholarships, and a loan co-signed by her Mama (an US citizen).

She wanted to earn for a few years at least in the USA so that she could repay her loans, and fund her travel to the US and Europe. She would then join a big 4 firm and work in US, China, Hongkong, Dubai before she came back to India. She was already learning Chinese as a second language/ hobby – saying this could enhance her chance of getting a China posting.

She wanted to do a sip of a small amount so that she could learn to live on her earnings (small her stipend was Rs. 8k per month, but her dad was spending on her anyway). No expensive phones (uncle anything more than Rs. 8k for a phone is a criminal waste), no expensive dresses (which was anyway being funded by well to do parents), …and this kid was hoping to fund at least Rs. 2L of her requirement from her savings / investment. She was clear that she did not want PPF (too boring too long – for your gen types not for me), no bank FD (too boring), and she did not need ELSS.

She wanted to do a sip which would AUTOMATICALLY go up by Rs. 500 every year – this eliminated Franklin Templeton – because they do not have an auto top up. This brought her to Icici and Hdfc.

She dilly dallied and then chose Icici Pru Discovery fund – realizing that it is for a life time kind of an investment – she would suspend investing if she became an NRI !!

I deal with many kids, but so much of clarity at 19? I guess maturity and clarity have nothing to do with age. A 16 year old Sachin Tendulkar was mature and his friend at 43 is still acting like a baby.

  1. but so much of clarity at 19? — LOL @ paras #5 and #6

    para #5 is fantasy
    para #6 is a recipe for financial slavery

    ” If you want to make GOD laugh, tell HIM your plans “

  2. Interesting.

    I feel this is the way to raise a kid. If a kid is shown the real world in formative years, they tend to grow up properly on the ground.

  3. I see all types of kids – and it is a fascinating journey. One niece of mine used to collect all her certificates, medals and preserve them…ultimately she ended doing her PG from Harvard, and she wanted that from class 12 onwards. Yes amazingly focused, clear, and going towards their goals.

    Some kids find their goals later on in life…and work towards that.

    Some at 28 keep wondering “i do not like this job and do not know what to do” types also.

    So planning, working towards a goal etc make sense for some people. For some people it does not. To each his / her own.

  4. Please elborate “she would suspend investing if she became an NRI !!”

    Didn’t understand why one would suspend investing on becoming an NRI?

  5. When I had been to U.S. for my onsite assignment – I met a girl who was from Bihar.
    She went to U.S. against her parents’ wish.
    Did all the procedures of visa and what not Alone.
    Did masters in the U.S. All the money she funded on her own. used to work there in jwellery shop.

    Now she is well settled and her parents are also happy. Guess god helps people if you are too determined.
    What clarity and vision she had!!!

  6. Hi subra,
    most of the your example belong to upper middle class(for me actually they are rich…not middle class at all)…I would like to know ur experience abt someone from lower middle class…whos parents not well earning…still that guy manage to achieve good things in finance…

  7. The NRI thing is perhaps due to taxation and legality. It becomes difficult to manage Indian investments if you are for example a US citizen.

    Also, between India and a developed country, the developed country is perhaps a better choice to invest.

  8. You can not invest in Indian Mutual Funds if you reside in USA.
    I am currently sailing in this boat, it’s a sad state of affairs due to rules enacted by US government to prevent Tax avoidance and Money laundering.
    Common people like me can not invest in Indian Mutual Funds!

  9. please dont generalize the NRI as only americans.. I am an NRI from middle east and a very happy investor in indian capitol market… 🙂

  10. Thanks for sharing this Subra. Indeed very good clarity and since this is at an young age, not a fantasy at all. She knows where she needs to go and has the time on her side to go there so All the Best. In fact, most of her travel around the world most likely will be funded by her job 🙂

    On US NRI holding investments, I believe they can still hold Indian investments but that will need to be disclosed and will be taxed (post exemption). Depending on situation and personal needs that could be an option.

  11. If I WERE filing my Income Tax return in the USA I would not invest in India. In India MF tax happens ONLY when you sell – in US the dividends are taxable..so how a growth scheme will be taxed I have no clue…why take on those jokers? So the comment – USA and Canada…it is worth avoiding investing in India…

  12. Persons referred in Sangita’s post and subra’s reply post are more commendable than the example in author’s post

    this—>She knew it would cost her Rs. 100 lakhs if she were to do it abroad and she would fund it through dad funding, scholarships, and a loan co-signed by her Mama (an US citizen).

    If her “goals” had been to do it on her own that’s more commendable.
    Looks like a typical pampered child wanting a free ride out of papa’s money + mama’s loan to boot.

    Just because she wants to sip for a meagre 2L out of her 1Cr budget does not make her smart.
    Seems lot of people want to raise their children this way.

    Good luck.

  13. moron buffett do i smell something burning? Kumaramangalam Birla did not fund his CA in England and MBA in US. I deal with many kids whose parents just ASSUME that they will spend Rs. 2 crores on their education and Rs. 1 crore on their wedding. THIS IS NOT LUXURY for them. It is their life style. DO NOT COMMENT ON OTHERS – do what you think is fine. And please stick to personal finance, not personal insinuations.

  14. Really impressed with the kids these days, my client’s son at 17 used to sit when i discuss investments with his dad and ask questions about investing. Many Gen Y are living in a brave new world!!

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