The moment you invest, you want returns. It doesn’t work like that: Lakshmi Iyer | Mint

The moment you invest, you want returns. It doesn’t work like that: Lakshmi Iyer

 Lakshmi Iyer, CEO, Kotak Investment Advisors.
Lakshmi Iyer, CEO, Kotak Investment Advisors.


The CEO of Kotak Investment Advisors feels one should start investing early even if the amount invested is insignificant.

Growing up, the most important lesson that I learnt from my mother was to avoid aamdani atthanni, kharcha rupaiya (spending more than you earn), says Lakshmi Iyer, chief executive officer at Kotak Investment Advisors Ltd (KIAL). She feels one should start investing early even if the amount invested is insignificant.

Ahead of Women’s Day, Mint reached out to people from the investment management industry to understand how they manage their money, what money lessons they picked up from their mothers and what advice they would offer to Gen Z. We spoke with Iyer as part of this Women’s Day series. Edited excerpts:

Do you manage your own personal finances or take professional help?

Given that I eat, drink, and read finance, I tend to take my own investment decisions. But, because I am busy managing money for everyone, my own personal finances take a back seat. So, to that extent, I have an adviser to track my portfolio and to take care of the nuances, especially the need for rebalancing or if there’s some opportunity that comes your way, etc.

You headed the fixed income and products team at Kotak Mahindra AMC. Are you a debt person when it comes to your personal money?

How much of nimbu paani (lemonade) will I have in my wealth, I need some red bull for that kicker to my entire financial portfolio! So, my asset allocation is significantly skewed towards equities because I am in active work-life and I get a periodic income. My portfolio has been like this for many years. The intention is to have a desirable corpus by the time I reach my not-so-active working years. That cannot be achieved through a predominant fixed income portfolio. I have 85% in equities, followed by fixed income, and the tail end is to real estate.

As a child, did you pick up any money lessons from your parents?

My dad worked in a manufacturing company all his life. My mom was a homemaker. So, there was no formal initiation in the family as far as finances go. But, you will appreciate how a homemaker manages money. In some sense, there was a very rudimentary basis of allocating money. My mom had a house to run, and we were two sisters who needed money to be spent on—so, how to do all of that. Today, we call it asset allocation. The most important lesson for me was to avoid aamdani atthanni kharcha rupaiya. My mom used to always tell me chaadar dekh kar paoon phailao (live within your means). And that’s so true in the investment world.

Was your mother a regular saver and investor? Where was she investing?

Unfortunately, the bulk of my parents’ money was in traditional investments, largely banking products and gold. My mom is like a diehard gold fan just like I am a diehard financial asset fan. Once I started working and I understood the nuances of managing money, it took me a great deal of effort to veer her away from the physical gold to exchange traded fund (ETF) mode of buying gold. And then gradually, I had to tell her, it’s not necessary that every time there is an occasion you have to buy gold. Systematic investment plans (SIPs) in equities will give you better gratification. And I converted my dad from a fixed deposit or recurring deposit fan to an SIP fan.

When did you earn your first ever income? And what did you do with it?

I earned my first salary when I was 18 or in grade 12. It must have been 800 or 2,000—I don’t remember. I started tutoring kids of up to grade 9. In those days, I didn’t have pocket money. And anything you wanted, you would ask your dad or your mom and they would ask you a thousand questions. When I got my first salary, I gave it to my mom and I told her, “I’m just giving you as a tradition because this is my first salary. But please give it back to me because I want to spend it." Every month-end, I would wait for my salary so that I could spend it.

Did your parents discuss money matters with you when you were growing up?

They saw my keenness, and that I was earning money. So, I used to have discussions with my dad about different banks, which one was offering the best rates. And, for us, it was in some sense, baptism by fire because the company that my dad was working with became a sick company. So, the family was without an income for a fairly long period of time. Of course, we had some savings. So, for me that kind of initiation (need for an emergency corpus) happened very early on in life.

I come from a household where clothes were bought only on two occasions, on birthdays, and on Diwali. And when the lockdown happened, my parents ensured that we got something on Diwali, though they didn’t buy anything new for themselves. So, things like value for money and how to be very, very conscious, those are what I learned from those days. And I am very happy and proud to say that even today, with relative affordability being way better, I think those principles, for example, not growth at any price but growth at a reasonable price, still come to the fore when I make investment decisions.

What money lessons or financial advice would you impart to today’s young generation?

I made my first investment in 2000- 2001, which was when I was in the formal working life. With the benefit of hindsight, I would say please start early. It’s extremely important to allow compounding to do its work. Don’t shy away from starting even if you think it’s a very insignificant amount, it doesn’t matter because when you allow markets to actually work on your portfolio for a longer period, then none of the adverse events such as covid can impact your portfolio on a durable basis.

Do you think today’s generation is more focused on spending rather than investing?

It’s a mix of both. But more than just spending, my observation is that this generation is up for instant gratification. In the Instagram world, you post a picture, you want likes. The moment you invest, you want returns. It doesn’t work like that. In the real world, there is an inflation monster who is constantly eating into your returns, so be extremely mindful of it and give it time. The one thing that I see is that Gen Z lacks in patience as a virtue.

How different is today’s financial world from your mother’s younger days?

Totally different, and why I say that is because the deployable avenues, and what financial education has done to the population at large, it’s absolute chalk and cheese compared to where you know when she was a child to when I was a child to where I am today. The harping on the idea of wealth creation was way lower and the only thing that was imbibed into our mind was safety, security and comfort. And you couldn’t break out of traditional bank fixed deposits and gold. The risk-taking ability today, I would say because of the orientation that has happened over the years, the idea of why wealth creation, why asset allocation, etc., has assumed a significant pole position lately.

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