How Bangalore’s thinkerati balances its books
When I was old enough to know the value of a 5 paise coin, my only source of pocket money was my uncle who would hand me spare paise every day. One day, I asked him where he gets the money from, and he quipped, “From the money tree. Sow the money and the tree will grow.”
I took that literally: sowed a fifty paise coin (had become greedy already) and waited days on end for the plant to show up. It never did, though now I know where the money comes from.
My first paycheck was when I was 12. The people at Tinkle comics paid me Rs 30 for a one-page story I had contributed. And today, I wouldn’t mind so much to spend some precious moments with a friend at a coffeeshop paying Rs 35 for a cuppa when I could as well make it at home for a lot less.
Poor money management, you think? Well, here is what some of Bangalore’s thinkerati have to say about all things currency.
RAMESH SADHWANI (43)
Partner, Sadhwani Group
I come from a family that believes in saving. But to drive my income stream, I have to spend. I always carry about Rs 2,000 to Rs 3,000 on me… my son or wife might want to pick up something or may want to eat out at a place where credit cards are not accepted. But when I am traveling to metros, cards are a must because invariably, you might have to spend more than you are carrying. Also, cash attracts attention. I have just one card and my spending hasn’t gone beyond the limit prescribed. My worst investment was when my brother dabbled in the stock market on our family’s behalf. We wrote off the amount that ran in lakhs. He ventured twice and lost. My dad always told us that the first time you do something, it’s not your fault. But second time is definitely your fault. Now we don’t dabble in shares, it’s a family taboo. The best investment has been silk for the last 40 years. Today, I manage my money. When it comes to spending, I am very balanced. There is an X amount kept for charity, family, business and vacation. I don’t spend on myself much, it’s usually on my family. But if I do, it’s on my wardrobe and some times, gadgets like PDAs and home theatre systems. My personal investment has been the house we constructed on Lavelle Road in 1991.
I don’t believe in short-term profits. There’s this saying, ‘hamari mehnat, khuda ki rehmat’ (our sweat, god’s goodwill) which sums it all. Personally, I would advise real estate. If you have bought it right, then you can’t go wrong. But it has to be done with surplus funds and not out of borrowed money.
I believe in spreading it out. Half the money should be in your core business, the rest should be in all income yielding assets possible like rental incomes, good portfolios where dividends are coming in and FDs in several banks. I usually consult someone in the business before investing. Then again, their advice is not so good since market forces are out of our control. In your core competency, you are fairly safer.
SAMIR SINGH (31)
As you get older, your priorities change. If you had asked me if I prefer to save or spend four years ago, I would have said, spend. But now, it’s save.
When I was at a boarding school in Dehradun, the mindset was to spend now. But after school and college, when I was starting out in England, I was seriously hard up. That’s where my present-day extravagance stems from. My biggest investment is on Hummer that cost me about 80,000 Pounds. Today, my extravagance lies in having the best shoes (Russel & Bromley, Ferragamo), watches (Omega, Breitling) and apparel (Diesel, Boss, Prada). I virtually live on credit cards. I have three, and since I have very large limits, I don’t need to go for more. My greatest expense is on wining and dining friends and folks. Each time out, I end up spending eight grand. But for the past one-and-a-half months, I was sick. It’s a good saving because I would be spending 8 grand 2-3 times a week.
But even now, I do realise the importance of saving. But when it comes in investing in stocks and shares, it’s left to my father. He is good at it. I set aside 25 per cent of my earnings for him to invest on my behalf, though I would ideally want it to be 33 per cent. My father’s very sensible. His approach is not short-term, but money over a period of time.
My worst investment was when I initially dabbled in stocks by myself. The price of the stock crashed from $26 to 30 cents. When the price is going down so sharply, you don’t want to sell. You think it will turn around. But it never did. After that, I decided to go to my father.
But I am very good with other people’s money. Once I advised my friend Udai Singh in Singapore to buy a particular stock, which I had been monitoring for some time. In six months, his investment of $10,000 yielded $42,000. He wanted to buy a house but couldn’t afford the down payment. But now he has.
My future investment is in a house in Delhi (my family’s there). I would build a house opposite Corbett Park. I have already identified the land and paid up the initial deposit. It’s on a hill and overlooks river Kosi.
I do charity. But it’s very random. There are times when I tip a beggar Rs 500 or help my relatives who are in need of money by routing it through my mother. I give away clothes to people who need it… it’s very impulse-driven. I never give through charitable organisations.
REZWAN RAZACK (46), managing director, Prestige Estates
I have never got a paycheck in my life and neither have I got pocket money. The only money we would get was on Sundays when we had to go for a movie. And that meant long waits for my father to eventually hand us some money. We used to accumulate old newspapers and sell it to waste paper marts on Ibrahim Sahib Street to get money.
I have never been a spender and neither have I been a ‘save, save’ person because that’s part of the family tradition. We were always taught to respect money.
If I want something I need, I buy. I don’t buy because it’s coming cheap. I have no obsession to hoard. When you attach too much importance to money, it hurts when it’s not there. If you are detached, it doesn’t matter.
My brother (Irfan) handles all our money matters, though both of us are commerce graduates. I don’t carry more than Rs 1,000 on me because I don’t need more. Wherever I go, people know me, so they send the bill to my office. I attach equal importance to cash and cards (have two of them). I did dabble in shares during the Harshad Mehta time. But I stopped because somebody else is controlling the price. For the price of the share to increase, we were depending on that company’s efficiency and inefficiency. It’s also such a mental distraction.
My best investment is property because that’s something I understand. And it has given me the best returns. My personal investment is a heritage building that I am re-doing. It will take us a year to move in.
My worst investment has been on cars. The moment you drive a brand new car from the showroom into your house, you stand to lose over a lakh.
Every man is a boy at heart and my indulgence is on collecting currency notes from around the world, especially Indian paper money (have the first Indian notes printed in 1913).
If you want to know the real value of money, try borrowing money from someone. Money makes friends and destroys a friendship.
I always set aside 3 per cent of my income on charity. If god has been kind to me, I better be kind to someone in need of help.
You never chase money. Once you work for it and don’t anticipate, money comes to you.
CMD, Biocon India
I went through a great deal of financial hardship when setting up Biocon. I couldn’t afford to buy myself a decent car; I couldn’t afford to fly and often traveled by train or bus for business meetings. It taught me the real value of money and what it means to earn money oneself. Today, I look back on my days of hardship as a great learning experience. The lesson I have learnt about money is to respect and value it, spend it wisely and strive hard to earn it. I strongly believe that money does not grow by saving it but investing it in something you believe in. In my case, Biocon, my best investment till date.
And since I have a simple financial portfolio, I manage it myself. I am a judicious spender, I spend when I need to but don’t have a ‘save’ mentality either. I generally carry about Rs 1000 in cash and depend largely on plastic money. The cash is only for tips and for small emergencies. And yes, I prefer credit cards but only keep two (Visa and MasterCard – HSBC and Citibank). But no, I don’t play the stock markets, though I do splurge on contemporary art… it is something I have a deep interest in.
RAMESH RAMANATHAN (39)
Coordinator, Janaagraha; ex-MD, Citibank, Europe
Dabbling in shares used to be my profession. I am more of a long-term investor than a speculator. My track record in investing is fairly good, though I always tended to get out of the investment at a healthy profit, and then have watched the stocks rise even further by substantial amounts. The joy of genuine investing is that the market is always teaching you. If you can make a return of 18% to 20% a year on a consistent basis, that is a terrific return.
Frankly, there are times when I don’t have a paisa on me for days on end, and I have to borrow money to pay for coffee at Koshy’s. However, on an average, I carry about Rs 1,000. I believe in spending when I have saved enough. My best investment was on a publicly traded stock in an American technology company. I sold much of my investment a few years ago when I believed the valuation had peaked. Why was it the best investment? Because I stuck to a discipline of investing in it for the right reasons, and got out (the toughest part) when I believed that it was the right time; and I was actually correct for once.
Investing takes a lot of patience and understanding, especially in the market conditions that we have right now. It’s best to leave this to professionals. For my personal finances, I do the planning and investing myself, though I am always open to investment ideas.
I only splurge on social issues. I don’t have unlimited resources, so I focus and identify certain areas where I could make a difference: Janaagraha is one example of where some of this money is going.
I have been through bad times. When I first moved to the US with my wife (Swati), we sold everything that we had in India, then borrowed a large sum of money from a bank to finance my MBA. The money wasn’t enough to take me through college. So my wife worked in the college cafeteria, using the working hours that were allotted to me, since her visa status didn’t allow her to work. She also worked as a waitress in the local Indian restaurant. We stayed as paying guests with a widow, who lent me her husband’s suit and shoes and bicycle to get to the business school and go for interviews. Every night, I would wait for her to finish work, and we would ride back home, doubles on the borrowed bicycle. Swati would cut out every coupon in the weekend newspapers, so that we could save 25 cents on vegetables at the local grocery store; she wouldn’t take the bus, but rather walk several miles – even in the snowy winter – so that we could save on the bus fare. When I got my summer internship, I stayed with friends over the summer, and saved most of my internship money, so that I could take Swati to Manhattan and show her around in style. It might sound corny, but we never felt unhappy, or felt that we should feel unhappy. Of course, there was a difference to the fun that we had, but it was every bit as enjoyable.
COO & director, Gotham Entertainment Group
I love to spend. Always if possible. I would assume that’s what almost all of us would like to do. I am just learning to save or the art of saving as I get older. I guess spending is what comes naturally, saving comes when you have commitments, need to buy really very expensive items or just for retirement. I think my spend level will be always on the higher side when my plans to retire are a long way off. By the way money is for spending right? I carry very little money in my pocket and sometimes none. This is because almost all my spending is charged to my cards. On any given day I could have Rs 100 or less in my wallet. I certainly prefer credit cards. They atleast keep track of my spending. Thanks to the popularity, most outlets accept them (I have 5 major credit cards).
The stock market is one area I have never had any experience. I believe in building my own fortune in a more cautious way and I think you need to be a little bit of a gamble to dabble in the stock market. Having said that, now you know I am a poor gambler.
My best investment is the time and effort I give to each and every project of mine. In the coming years, all of them are sure to be the best investment I have made.
And my worst investment is when I am sometimes forced to take on an assignment and I hardly have enough time to do it well. I try to avoid these situations as much as possible. To me, this is like an investment that doesn’t give you the desired returns or goodwill.
I set my financial guidelines and targets. Initially, I work on both the micro and macro levels and later the experts and the financial team follow it through. This is one area I keep a hawk’s eye on to make sure things are moving along fine. I believe that if a company or a person respects the financial aspects, sooner or later they’ll certainly do well.
I love cars and gadgets. Once I have enough money I’ll certainly splurge on them. And to think, I have lived on a $1 a day budget for a year and a half. Studying and working for 20 hours a day. I realised that I could do everything with very little money. I really enjoyed myself during that period in my life because you find ways to somehow manage with what you have. That was a very important lesson to me. Respect money.
Then you’ll have a lot more of it always available. Then spend it.
(Published in City Reporter, 2003)