He has to or she has to save 12,500 rupees a month for 60 years to reach the same 2.3 crore which a guy who started at 22 with 2,500 rupees. So that's the power of time and compounding.
So these are the stages, and then if one to three years are only these goals for which you are saving, then I would say be conservative, you know, like the bank recurring deposit, FD, because PPF locks the money.
Is it even possible for our storefront line to think of, you know, investing in houses, and you know, and how do they go about planning from a young age so that when they are at least 35 they can go ahead with this dream of theirs?
Sir, calling from so-and-so place, you would have got an OTP. Can you share it with me? Otherwise you will be under deep trouble. Your account will be locked, so on and so forth.
In the world of now AI, Suvendu, the voice can come in the form of your daughter's voice, your son's voice, that 'I'm in problem, please transfer this money urgently.'
Dear store teams, whom lovingly we called the brand ambassadors of Titan Company, today we have Mr. Ashok Sonthalia, the CFO of Titan Company, in a conversation with me in the series Gold Standard on individual finances. Being the CFO, he has sharp insights, but let us see what does he have to tell about our store staff, our brand ambassadors.
Welcome, Ashok. Good to have you here on this podcast series which we call Gold Standard. Today's edition is about, you know, we are going to talk about individual finances and finances which are specifically concerning our store staffs. You know that we have about 21,000 people working in our retail stores. About 70% of them are below the age of 35. 50% are below the age of 30. So it's a pretty young workforce, and as you know, they are the reason for our success. And how has been the quarter?
Okay. Thank you, Suvendu. Thank you for having me in this important podcast. And for an audience such important audience, I'm really excited to be talking to them. Quarter has gone well. Company is doing well, and you know, I think Indian consumers are loving us because of all these 21,000 people you spoke about, the way they conduct themselves and the way they treat our consumers. So we are doing well. So basically our store brand ambassadors are the reason for our success.
Yeah. And Titan Company Limited is standing on the shoulders of these 21,000 people. All right, sir, finance for a company is something large. It's at an organizational level, but I want to ask you if the individual also should safeguard himself financially, invest, and when and how do they start?
Yeah, so I think our life doesn't go in a very, very uniform manner. You know, there are ups and downs, like ups and downs in companies as well. But in personal life there are situations, there are stages of life. But I would say the most important thing is that it is not how much the first salary is coming to you, but the first salary is enabling you to start on a journey, which is the journey of savings and wealth creation. And I think that's the most important thing, that it is not important what you get as a first salary, but you start saving and you develop a habit which is your lifelong habit, because it is the time which creates wealth, not the amount with what you begin with.
All right. Yeah. That's a very, very profound statement. It is the time which creates wealth and it is not the amount with which you begin, which means, sir, you are saying that even if the savings are small initially, it is okay.
Yeah. So I will just give you an example, Suvendu. Like suppose someone is getting 20, 25,000 a month with their salary, sales incentives, etc. I would say even a person who starts at the age of say 22, saving 2,500 rupees a month up to the age of 60 on a modest and not a very exciting return, say 12% return, that amount will become 2.3 crore rupees. Okay. But say another person who thinks, okay, I will wait for some time till my salary becomes bigger and I'm able to save, the guy starts at the age of say 35, he has to or she has to save 12,500 rupees a month for 60 years to reach the same 2.3 crore which a guy who started at 22 with 2,500 rupees. So that's the power of time and compounding and starting early.
I'm so glad that I got you in. 2,500 rupees per month can become 2.3 crores at the age of 60. And 2,500 in the beginning may be a little high, but over time it becomes smaller and smaller.
That reminds me, sir, I started my Public Provident Fund account at the age of 28. And you know, there is a limitation of savings in that. Despite that, over the years I have been able to collect a substantial sum of money and that will contribute to my retirement corpus. Similarly, there must be other instruments. Will you be able to tell us where to start?
You know, just to not straightway jump into instrument and product, I think people should very clearly get an idea about their goals. You know, first that in the say next three years what I want to do, say four to seven years what I want to do, and seven years onwards what I want to do, and then instrument choices can be made. So say I'm just thinking about your stage of life. In the first three years, some of you may want to buy a motorbike, a two-wheeler, or I want to marry, or you have a desire to even further get education. You want to work for three, four years and then you want to go for a higher education. So these are the stages, and then if one to three years are only these goals for which you are saving, then I would say be conservative, you know, like the bank recurring deposit, FD, because PPF locks the money. So if you have started saving for these goals, then these goals have to be in recurring deposits, bank FD. If you want mutual fund, then liquid debt mutual fund. I may elaborate on that, but those are the things which you do for these goals. Then four to seven years, if you know at the sixth year or seventh year you want to make a down payment for your first house which you want to buy, there may be, I would say, the product could be you must go to mutual fund and the balanced advantage fund which invests in equity as well as in debt, so that you are not taking undue risk, but they will help you to in a manner grow nicely, a little bit better than the first three-year instruments. They can give you higher return, but they are also not very risky at that point of time. But anything beyond seven years, you know, for your retirement or for children's education or their marriage, I think you must go to equity mutual fund, and we can discuss about that because seven years is a good enough horizon. Beyond that, equity market will give you definitely best return, you know, among all asset classes. So that is how I will look at it: bucket your goals and then decide which instrument for which goal I will do them. That will be a better strategy. Yeah.
All right. So if I just think of our people and see their age group, you know, so I already mentioned that 50% are below the age of 30, and the average earning may be 30, 35,000 or so, and in some cases a little more, in some cases a little less, that's okay. So I think even if somebody aims at putting away 5K per month, okay, that can lead to about more than a couple of crores, right? Two to three crores at the end of this thing. I also heard you say that you should, you know, divide your goals, and if the first few years marriage is a life stage and things like that, then it really helps in meeting those. Apart from that, is there any merit in keeping some liquidity always ready to meet the unforeseen?
Yeah. So very important point, Suvendu, and I want to add a little bit, you know, over and above your question, that you know, we sometimes think that we will spend our necessities or whatever we have to do monthly, whatever will remain, we will save that. I think you have to flip that. You have to first save and then spend. You know, and sometimes a good practice is actually to have two bank accounts. You know, as soon as your salary gets credited, whatever you decide, you put a standing order, that much money immediately gets out and automatically, without you doing anything, gets transferred into another bank account. So that's a practice, if you like, you can do that. So save first, and then, and there is a golden rule people talk about, 50-30-20. You would have heard about that. 50% of your monthly salary is towards your need, you know, the basic needs which you need to fulfill. 30% is towards your want, you know, you want to go to restaurant, movies, whatever you want to do, you know, those are want. And 20% is saving. The people who are starting and really salaries are not, they may start with 10% and gradually reach towards 20%. But that's the rule, 50-30-20, and I think everyone should follow starting from your first salary. You know, that's my most important point because first salary enables you to embark on this journey and build a very, very long-term habit.
Yeah. True that, because I often go to stores, as you know, and the outside world is constantly luring. Good phones are getting launched. Correct. And good brands are getting launched. Mobiles are getting, you know, better and better, stylish and more stylish, and people need that. So people want that and they end up buying. So I just want to ask you, if they have to borrow, how much is okay to borrow?
So yeah. So Suvendu, the previous question also I didn't completely answer about your liquidity part which you spoke about. Yes. So I think when you start getting into your savings and wealth creation journey, the first thing is that you create your three to six months' expenses. We call it emergency fund in investing parlance, which is very important because you don't know about life, that what would happen, what emergency, family emergency or personal emergency can come in. So at least three to six months somewhere parked in either savings account or slightly higher return, but there should be available in one day notice or immediately, you know, that you must create. So that's the first thing which you do. The second thing is that you must get your health insurance done. You know, if company is providing, as long as you are young for a few years, you may defer. If it is not, then you must create a health insurance because health costs are going quite steeply in India also. So you must, because otherwise one serious sickness can wipe out many years of savings for you if you don't have. So these two things you must address. And the third thing I would add, Suvendu, that if you are carrying some high-cost debts, like people have credit cards and they are not paying the entire sum, they are rolling it over, or you have got into a lender who is charging you more than 15% kind of number, you must pay those debts first and then only think of, you know, okay, now I will start my wealth creation and saving for long term. So that is one thing I would say. The second part which you talked about, you know, all these new items getting, where coming up very, very important or very lucrative scheme, you know, the no-cost EMI, buy now pay later, and everything. You know, so we talked about 50-30-20. So 30 is your monthly, suppose 30,000 is your monthly salary, just for example. So 10,000 is roughly 30% of that. So that's the 30% for your want. So I would imagine you want a good mobile phone, you want a motorbike, you want to go, so you know, you want to do some of these things. As long as these EMIs, if at all you are doing, or buy now pay later you are doing, you must have this discipline of 30%. If my take-home salary, 30% of that, so in case of 30,000, I will not get into any scheme however good and attractive and desirable it is, if it is taking my total monthly EMI more than 10,000, I will just control myself, turn around and just walk away. So that's the way. There's a limit to how much you can go on your EMIs. It's better not to stretch it beyond 30. And I would rather reserve it to create some asset like later point of time on house, etc., rather than getting into these kind of.
