Let’s Talk Business: In Conversation with Monika Halan

In an exclusive conversation with HarperBroadcast, Monika Halan talks about wealth management and her new book, Let’s Talk Mutual Funds.

Read below!

1. Following the massive success of Let’s Talk Money, Let’s Talk Mutual Funds presents an actionable blueprint for readers who want to get mutual funds to work for them. Tell us about your journey of writing these two books. 

   It is my passion to change the way Indians think about money. We have a poverty mindset triggered by centuries of being poor before independence. And then post our political freedom, we were chained by a socialist ideology. We now know that lived socialism is a disaster. My books help us, as a nation, overcome that past and onboard a new way of thinking about money, where being rich is good. How we earn it and how we spend it might be moral questions, but having money is desirable. This is the DNA of the books. The rest is a how-to and how-not-to.My books also attempt to correct the behavioural error we make as investors as we move from being very risk-averse to taking too much risk. From FDs we move to day trading or cryptos. I want to move Indians to somewhere in the middle these two – totally risk-averse and very high-risk – behaviours. I want my readers to take the path of taking considered risk to create long-term wealth. When I help people take better money decisions, I feel that I win. That feeling for me is more than money.

2. Ahead of the release of the book next month, what should readers and investors expect to gauge and gain from Let’s Talk Mutual Funds? 

   There are three errors that most people investing in mutual funds make. One, they think it is only an equity route, they do not realise that mutual funds are a route to equity, debt, gold and real estate and combinations of these asset classes. Two, they get frozen with choice and fall into the trap of buying on tips. With over 1,000 schemes and thousands of options around those schemes, investors don’t know how to short-list and choose schemes that work for their unique needs and tend to make errors in their selection. Three, investors tend to chase the highest return because they think that mutual funds are just a high return product. Mutual funds are good not just for returns, but they are a way to have money available when you need it. For the short-term, there is more safety than high return in some debt categories. For medium terms needs, there is returns plus predictability in some hybrid categories of funds. For long-term needs, there is a whole range of equity funds to choose from. My book gives a system to cut down the choices, put filters of performance, cost and risk and then gives readers model portfolios to build their own unique set of funds.

3. Mutual funds are subject to market risks, but they can also be channels for lucrative returns. How does the book cover this volatile quality of investment tools like mutual funds? 

   My book will give you a simple way to understand mutual funds. It will tell you that there are 37 categories of funds – 11 across equity, 16 across debt and others – and that you do not need all. Some of these categories contain very high-risk products, such as small cap funds or credit risk funds, and some are very safe – liquid funds, for example. I help you understand the features of the categories on both risk and return before telling you how to shortlist the ones that work for you. Next, I put in place a system to select schemes in each of the categories. And then we build portfolios with these schemes in proportions that reflect your goals, risk appetite and when you need the money. A car in the hands of a novice is dangerous for the driver and those on the road, but a skilled driver gets the best out of the car and the journey. Mutual funds are similar. If you use them without understanding them, you will harm your finances. Skillfully used, they are your partner for your entire money journey. And then after you for your kids.

4. Sometimes books on financial management can get slightly technical. How have you tried to simplify the complex matrix of mutual funds for the ordinary readers? How was the process of writing this book different from the last one? 

   I take great joy in making complex issues simple. Finance can be made simple but the use of jargon is intimidating to average people. I am lucky to have the skill to turn complicated concepts and ideas into stories and analogies that we can all understand and benefit from. My writing style is easy. But before I get down to write, the book is fully cooked inside my brain. Mutual funds, for example, was not an easy book to crack simply because the area is so vast and sometimes technical, I did not know how to begin. I happened to teach a post-graduate class at the National Institute of Securities Market in end 2022 and that process cooked the book in my head fully. The stories and anecdotes flow during the process of writing, they are not staged. Each story is true. That is the time my heart takes over from the head! This combination of head and heart is probably what appeals to my dear readers.

5. In view of the recent news about ₹2000 notes getting banned soon, how do you think investing in mutual funds can help citizens anxious about exchanging their reserves? Could you also tell us a bit about the correlation between currency flow in an economy and investment tools like mutual funds? 

   Thoughtful investing in mutual funds makes you less susceptible to panic attacks with events that social media hysteria builds up. Mutual fund investors would typically have had no stashes of Rs 2,000 notes at hand to worry about. Mutual fund investors would take their extra liquidity and put into a liquid or a money market fund for both safety, ease of use and slightly higher return than an FD.

6. How was your experience of curating the HarperBroadcast Business edition newsletter for the month of May? 

   I think you should ask the question to the Harper team as I am a tough editor to please! Having said that, it has been my absolute pleasure to reach out to the readers of HarperCollins books. I take the opportunity to say that, as an author, I am delighted to have my list of books with such a wonderful and supportive publisher with an ace team. I wish all the readers a very rich money journey. Enjoy it now and in the future.

In conversation with Kartik Chauhan for HarperBroadcast