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Vadodara MFD Mamta Shah encouraged two sisters to start SIP when they withdrew their first pay check. What started with a few thousands translated into a sizeable net worth over years.
Here is this interesting story in Mamta’s words.
My clients who are parents to two young bright girls used to stay in my vicinity and one day during a casual conversation they mentioned that their elder daughter who had completed higher studies in Bengaluru had got a lucrative job offer there. On hearing this, I requested them if could speak to their daughter on savings and investments. Since they had already experienced the benefit of compounding, they happily agreed.
I kept my conversation casual and made the fresh graduate comfortable by talking about some general topics. Then, we spoke about her career aspirations and how she plans to spend her salary. This is when I introduced the concept of savings and investments to take up common questions like - Are savings and investing the same? Is investing complex? How do investments help achieve growing financial needs and upgrade lifestyle?
In this fashion, I integrated the concepts of compounding, inflation-adjusted returns and benefits of having a longer investment horizon by starting earlier. Additionally, I emphasised the ease and flexibility that SIPs offer.
I also had a similar conversation with her younger sister who also had a job offer then.
In this way, we moved from a casual talk to a serious financial discussion and the sisters agreed to start with a Rs 2,000 SIP. With time, they experienced the benefits of compounding personally just like their parents and voluntarily raised their SIPs and kept increasing them with every appraisal cycle.
Moreover, they also made lumpsum investments through inherited money.
Today, after an investing journey of over 15 years, both sisters are well-settled in Bengaluru. What started with a modest monthly SIP of Rs 2,000 translated into a corpus of Rs 3.5 crore and 3 flats for the elder sister. A similar start helped the younger sister create a corpus of Rs 5.5 crore and 2 flats.
Youngsters have the benefit of time on their side but lack the knowledge and guidance. Sensing this gap, I have now started focusing on millennials. My frequent interaction with them has taken me up and close to their traits and ways to deal with them meaningfully.
Key traits
- Young investors are normally curious and usually make quick decisions
- They are social media savvy and enjoy doing their research
- Also, they are more comfortable when you use their lingo i.e. words like FOMO, YOLO, etc.
- Youngsters appreciate being treated as responsible adults
- They don’t find bookish knowledge interesting
Ways to deal with them better
- Be ready with details like definition of technical jargons, numeric illustrations, comparative analysis of investment categories, fund performances, etc beforehand. The ability to answer their questions helps win their confidence
- Imposing restrictions may not go well with them, instead give them the comfort to discuss any financial guidance that they come across on social media
- Try using their lingo, hearing familiar words gives them additional comfort
- Leave the decision to them rather than involving their parents. Whether they want to involve their parents is a decision they need to take
- Use story telling to simplify concepts and convey the importance of mutual fund investing
About Mamta Shah
Mamta Shah has been distributing mutual funds since 2002 and is the founder of Mamta Shah Financial Services in Vadodara. She currently caters to 400 clients and manages assets of Rs 150 crore.
