Financial literacy remains a pressing need in India, where many individuals aspire to secure their financial future but often lack the foundational knowledge necessary to make informed decisions. Recently,
in this special episode of The Simple Hai! Show, co-founder & editor-in-chief Vivek Law speaks to Radhika Gupta, MD & CEO of Edelweiss Mutual Fund, and Niranjan Avasthi, SVP, Edelweiss MF, who discussed their collaborative book, "Mango Millionaire", which simplifies personal finance for the common Indian and inspires realistic financial goals. This article shares their insights on investing, saving, debt management, and the importance of financial education, weaving in conversational moments that capture the essence of their work.
Origins of the "Mango Millionaire" Concept
The term "Mango Millionaire" is rooted in a beautiful metaphor shared by actor Saif Ali Khan in the movie "Love Aaj Kal". Avasthi explained, "Saif Ali Khan said, 'We are mango people.' The common man doesn't aspire to become a multi-bagger investor or emulate Warren Buffett. Instead, the typical Indian desires to earn enough to live a comfortable and dignified life." Gupta and Avasthi have envisioned the newly launched book as a means to create 'mango millionaires', ordinary people who achieve financial independence without unrealistic expectations.
When Law asked about the inspiration behind writing this book, Avasthi shared, "Working with Radhika Gupta on her previous book Limitless inspired me. She has always been an inspiration in simplifying complex financial jargon, making it accessible to the average person." Their shared vision was to demystify finance and make it relatable by using everyday language and examples drawn from popular culture and films.
Setting Realistic Expectations in Investing
One of the central themes discussed was the importance of setting realistic expectations about investment returns. Avasthi likened investing without foundational knowledge to "wanting to swim without learning how to breathe underwater." He cautioned against chasing astronomical returns, saying, "Many people come with the mindset of earning 50 percent annually because they heard about someone making 40 percent returns casually during their morning walk. But investing is not a competitive sport."
Gupta emphasised the need to understand risk tolerance: "Risk is not a bad word. You should take as much risk as your stomach can handle. With the right expectations, your investment journey will be smoother." The authors suggest that aiming for 12-15 percent returns is both realistic and sufficient to meet most financial goals, based on average rolling returns from equity and debt instruments over a five- to ten-year period.
When Law asked about the impact of historical high returns on investors' expectations, Avasthi shared that past stellar performances, such as 21-22 percent compounded returns over 25 years, often inflate expectations unfairly. "People should be happy with consistent 12 percent returns. Anything above that is a bonus," he added.
Financial Foundations: Saving Before Investing
The authors highlighted that many investors overlook the basics, such as saving money and avoiding unnecessary debt, before jumping into complex financial products. "In our book, we discuss equity and bonds much later. First, we talk about how to save money, avoid debt, and understand your cash flow," Gupta explained.
Both authors advocate a balanced approach to savings and lifestyle. Avasthi reflected on his younger days, saying, "When I was 21-22, I was very frugal, so much that a $5 handbag was a big deal for me. But even today, despite earning more, I remain conservative because that discipline is important." Gupta added, "Life should be enjoyed. I buy bags, cars, and live well, but I also save wisely. We promote a 'middle path', not extreme saving or spending but balance."
The 10-30-50 Saving Rule: A Practical Framework
One of the standout practical solutions from "Mango Millionaire" is the 10-30-50 savings framework that guides people at different life stages:
- Ages 20-30: Start by saving 10 percent of your income. This recognises the lifestyle expenses and financial pressures young adults face.
- Ages 30-40: Increase savings to 30 percent as many immediate expenses like weddings, car purchases, and home buying may have been addressed.
- Ages 40 and above: Aim to save 50 percent or more as income peaks and lifestyle expenses stabilise.
Avasthi emphasised, "This approach is realistic. It's impractical to suggest a 25-year-old save 90 percent of their income." The authors' goal is to give readers a framework that they can adapt without feeling overwhelmed.
Debt: Good Debt Versus Bad Debt
The discussion on debt management was particularly insightful. Gupta explained their framework of "good debt" and "bad debt." She said, "Good debt is when you borrow for needs, like education or a home, which builds an asset, yourself or property." She added, "Bad debt is when you borrow to fulfil wants or desires you cannot afford, like expensive jewellery or credit card overspending."
Avasthi reinforced this by outlining practical limits and a clear framework on debt: "Your EMI should not exceed 30 percent of your monthly income. Also, your total debt should ideally be no more than three times your annual income." They also recommend holding six months' worth of EMIs as emergency funds, especially considering job uncertainties and economic fluctuations.
The Role of Systematic Investment Plans (SIP) and Systematic Withdrawal Plans (SWP)
Radhika Gupta and Niranjan Avasthi discussed investment tools that many people are familiar with but often misunderstand. SIPs are widely known, but SWPs (Systematic Withdrawal Plans) get less attention. Avasthi pointed out, "Investing is only half the journey; how you exit and use your money is equally important."
Gupta elaborated, "SWPs provide steady income, especially for retirees or those taking breaks from their careers. It's an excellent tool for managing cash flow during uncertain times." She also stressed the importance of SWPs for women and entrepreneurs who may have irregular income streams.
The Emotional Connection to Money: Family Lessons and Cultural Insights
Gupta brought a personal touch by sharing how her mother avoided discussing money despite being an economics graduate. "She initially shied away from money talks, but after reading our book, she understood the stories and references, which made finance relatable," she said with a smile.
The book also contains references to iconic Indian movies like "Mother India" and "Baghban" to connect financial lessons with cultural narratives. Avasthi added, "These films represent sacrifices parents make for their children, often at the cost of their own retirement planning. It's a reality many Indians face, having assets but lacking liquidity or financial independence."
Asset Allocation and the "Thali" Approach
In contrast to complex financial jargon like "asset allocation," the authors introduced the "Thali" approach. In this simple metaphor, every financial instrument has its place on your "plate," just like a balanced Indian meal. Avasthi explained, "You never know when a particular asset becomes useful, so it's important to have a diversified portfolio."
They also discussed the changing role of gold in portfolios. While gold has outperformed equities over the last decade, recent equity returns have surpassed gold, highlighting the dangers of recency bias. "People try to time the market, but that's a terrible strategy," Gupta said. "Instead, keep a balanced 'thali' with equities, gold, bonds, and cash."
Financial Independence and Redefining Retirement
The meaning of retirement was redefined during the conversation. Avasthi shared, "Retirement doesn't mean stopping work; it means earning at your own pace and choice." Gupta added, "Retirement planning today is more about financial freedom than age-based stopping of work."
They acknowledged changing societal structures, where children may not always support ageing parents, and many retirees remain active and working well into their 50s and beyond. The book encourages planning for liquidity and a steady income, rather than just accumulating assets.
Making Finance Fun and Accessible
Finally, Gupta shared her philosophy behind using movie references and simple language: "Finance should be simple and enjoyable. If people have to read a financial document, why can't it be fun? Our book uses stories that resonate with everyday Indians, making complex topics easier to digest."
Avasthi agreed, "Many financial lessons taught through cricket analogies alienate women and non-sports fans. Using food or movies as metaphors is more inclusive and relatable."
Why "Mango Millionaire" Matters?
The conversation with Radhika Gupta and Niranjan Avasthi revealed a refreshing approach to financial education in India. "Mango Millionaire" is not just a book but a movement to empower ordinary Indians to take control of their finances with realistic goals, practical frameworks, and a balanced lifestyle.
As Avasthi aptly put it, "Most people understand they need to invest but don't take the first step. Our book helps you take that step fearlessly and knowledgeably." For anyone confused about where to start or overwhelmed by complicated financial advice, this book is a must-read.
Financial security is not about chasing unrealistic wealth, but about building a life where money supports your happiness and independence - truly the essence of being a "Mango Millionaire."
