Where should a woman invest?

IF Carrie Bradshaw (played by Sarah Jessica Parker, in the popular HBO television series, Sex And The City), is your idol, this is just what you need to read.

Like her, you are young, footloose and fancy-free, making enough money to have a great life and thoroughly enjoying your independence. Perhaps you will think about helping your family later. But, right now, if you are doing any investing, it is only because of taxes.

You are not interested in building wealth and creating assets because you will probably do that once you settle down with the man of your dreams.

A piece of advice: don’t elope when you find him because it may not be as romantic as it sounds. All family support systems may be cut off besides a possible partial or total erosion of all savings, not to mention emotional stress after the short-lived excitement.

This is, no doubt, a financially lucrative phase made all the more enticing due to lack of commitments and complete freedom to spend your money the way you wish. But you cannot possibly spend it all because, remember, your financial resources are your strength. They will help you be independent.

So don’t swipe that card like a maniac, or you will feel your financial strength ebbing away.

What does a modern day woman do to handle her financial life? How do you invest your money? Here are a few tips:

i. Put 90 per cent of your earnings into wealth generating instruments such as shares and equity mutual funds. Since women are not traders by nature and have the patience to see the fruits of investments, they can make most of this avenue. But understand a bit about risk management first.

ii. Place about 10 per cent of your proposed savings into bank deposits or similar. Unlike single men, a woman should never be broke.

iii. Invest in life insurance prudently, and only if you have dependents on your income.

iv. Stay away from fixed investments such as Fixed Deposits, Public Provident Fund, National Savings Certificates, etc. Your goal is to build wealth, say, by the time you are married, which may be about three to 10 years away. These instruments will not serve your medium term purpose.

v. If you are looking to get married, do ask questions to gauge how your prospective partner manages money and, more important, how he saves.

vi. Women are born with a softer streak so excessive gifting/helping is second nature. But avoid going overboard here.

vii. Beware of women-oriented offers/products such as credit cards, insurance and the like. They may be expensive or regular products repackaged.

Doing the above will take you no more than a week. So stop that partying for a week. With your finances sorted out, the party will not stop for the rest of your life. With or without your husband.

Author: Kartik Jhaveri
Source: Wealth, MoneyControl

Get VCs to part with their money

BUDDING entrepreneurs may have several questions relating to the big F: funding.

For starters, get the basics right on how to woo a venture capitalist.

How important is a good presentation of an idea apart from having a good idea? How should I prepare before presenting my idea to a Venture Capitalist?
- Samir Jain, Bangalore

The presentation is a very important aspect of selling anything, including a good idea, to anyone, including a VC. It’s extremely important to be able to clearly articulate the value proposition of your company without getting lost in management and technical jargon.

In VC presentations you are unlikely to get more than 30 to 40 minutes in the first meeting to make your case. DON’T go with 50 slides — VCs have short attention spans! What this means is that you have to make an impression in the first short meeting. This can only happen if you have a crystal clear understanding of the market, the opportunities, and the value proposition.

If you cannot explain what your company is all about in a few short crisp sentences, you’ve lost the attention of the VC. This also means that you should be a great communicator. Practice!

Ideally, you should have no more than 20 slides (including the cover and ‘thank you’ slides) to cover the team, market, offering, value proposition, revenue model, and financial plan. If there’s an interest, you can share more information or use back-up slides to respond to questions.

You should demonstrate focus in your idea and in your execution plan. Practice with a few “friendly” VCs. The way to identify such friendly VCs is through networking and reference checks. Talk to entrepreneurs who you know, advisors, angels , industry groups such as TiE and Nasscom, attend entrepreneurial events etc to get connected and then over time build a relationship with them before approaching them.

Take inputs from the advisory board. What’s this? Well, it is important to consider setting up an Advisory Board one that has senior, experienced people from the relevant industry who can help you with strategy, hiring, customer contacts, governance, financing etc.

Talk to experts, those who are from the industry and those who’ve “been there, done that”. Research the industry and market in which you wish to play. Find the names of the folks you wish to connect with and then you try and reach out through multiple avenues as in the case of reaching out to VCs. This could be critical!

There is no shortcut. There is also no magic formula. The key is preparation and in knowing your market, the offering and in communicating the essence of the value in a crisp and clear manner.

How do I reach out to VCs?
- Mary Joseph, Chennai
Once the specifics have been thought through in detail, then you need to reach out to VCs. But how does one reach a VC?

As usual, there are good ways and bad ways. A bad way is an approach that shows you are ill-prepared or that you have not researched the background of the VC adequately as indicated earlier in this article.

As you’ve probably guessed by now, sending in a well-researched business plan consequent to a referral is a good way. A VC receives many plans from various sources. So, to get any attention, a referral is probably the best way.

A referral also implies that some kind of quality check has been done. So how does one get a referral? One way is to use the good offices of the Advisory Board (a group of people with relevant industry experience and expertise who can be a sounding board, help in hiring, strategy, customer connections, etc. They also provide air cover of credibility to a young start-up) or some other trusted intermediary.

In cases where a cold contact just has to be done, the Executive Summary should be sent in, first. This is a two to three page document that captures the profiles of the key team members, the market need or opportunity , the uniqueness of the offering , the business model, revenue projections, and some info on how much money is being sought and for what purpose.

This should be a well-written, professional and crisp document. If this is of interest, the VC will probably call you for a meeting. Go well prepared for the discussion. As the old saying goes, “you won’t get a second chance to make a first impression”!

Approaching a VC should be the job of the CEO. The CEO makes the elevator pitch, the main presentations and answers all the key questions about the company, the market, the positioning of the company, the road-map etc.

It is a good idea to meet the VCs with the key team members in tow as it gives the VC a good perspective of the dynamics and competencies in the management team. Make sure the team members are well prepared. For example, the marketing person should be able to answer questions about the market, positioning, customer/prospects, pricing etc.

Author: Sanjay Anandraman
Source: Wealth, MoneyControl

Buy mutual funds, cheap

IT pays to buy mutual funds directly from the fund house. Here’s why.

You save money on the ‘entry load’, a deduction made by the mutual fund company from your invested amount and used to pay the agent’s commission.

If you choose not to use the services of an agent, you can save anything between 2 to 6 per cent of your invested amount.

For instance, if you want to invest Rs 10,000, earlier (three months ago when you could not buy mutual funds directly from the company but only through its agent), the fund house would have deducted around Rs 200 (for the agent) and made a net investment of Rs 9,800 on your behalf.

But now, if you choose to invest directly from the mutual fund house, Rs 10,000 will be invested. There are three ways to buy a mutual fund, directly.

1: Head to the nearest office of the mutual fund house.

Visit the office, fill up the form, submit the documents and voila, you have saved 2 per cent. Remember that your bank and the mutual fund house, even if they belong to the same group, are separate entities.

For instance, if you want to invest in a mutual fund scheme from SBI Mutual Funds, you cannot go to the nearest branch of the State Bank of India. In this case, the State Bank of India will act as an agent for SBI Mutual Funds, and you will not save on the entry load.

Instead, head to the nearest SBI Mutual Fund office.

2. Drop in at a collection centre or investor service office.

Applications submitted to the collection centre or investor service centre will not attract entry load. If the fund house does not have an office, collection centre or investor service office in the city, you could courier your form. If the cost of the courier is the same as the entry load, it would make sense to hire an agent and save yourself the trouble.

3: Buy them online.

If you are Internet-savvy, online shopping is the way to go. Buy the mutual fund of your choice by visiting the web site of that particular fund house. Fill up your personal and investment details as asked in the application form and quote your Permanent Account Number (PAN) (this is mandatory).

You can pay through your bank account debit card, if that fund house has tied up with your bank. In case your bank does not feature in list of tie-ups, don’t worry.

There’s always Plan B:Choose to make the payment through a cheque or demand draft. In this case, you need to courier the same.

If you opt for a Systematic Investment Plan (SIP), choose the Electronic Clearance Scheme (ECS). Some fund houses do not offer SIP investments, online. In this case, you will need to visit a branch to do the same.

Top documents

When buying mutual funds you need to submit these:

• Application form
• Cheque, demand draft (depending on mode of purchase)
• Copy of PAN card attested, by an officer at the mutual fund office, your financial advisor, your bank manager, any gazetted officer/notary or judicial authority.

Agent or direct purchase: what’s best for me?

“This move is controversial but progressive. It will empower retail investors. But it makes sense to those who do not want advice and service from their agents,” says Dhirendra Kumar, CEO of Value Research.

This means that if you are a savvy investor and do not need the advice of an agent to know which fund is best for you, the direct route is a blessing. However, if you need that little bit of help, it’s always better to choose an agent and invest in the right fund.

There’s no point trying to save a few rupees if you end up making a bad investment. Also remember, that an agent will take care of all the paper work and will also be around if you need help with redeeming your investment. So, choose the route that works the best for you.

Author: Kapildeo Singh
Source:  Wealth, Moneycontrol