“A to Z for First Time Investor” – Book Review

Title: A to Z for First Time Investor
Author: Ankur Kapur, CFA
Publisher: Plutus Capital (2017)
M.R.P: Rs. 199
Pages: 120
Reviewed By: Shivani Chopra, CFA

“A to Z for First Time Investor” is a personal finance book written in a simple yet effective manner. The title of the book is very apt as it attempts to exclusively focus on people just starting their investment journey. It compiles the most important questions such investors would have and offers advice for this long term financial journey to be a smooth one.

The author of the book, Mr. Ankur Kapur, CFA is the founder and managing partner of Plutus Capital, an investment advisory firm and has over 15 years of experience in the financial services space. He has dedicated the book to improving financial literacy and ending mis-selling of financial products. Using his rich personal experience and expertise, the advice has been written in easy to understand bite-size pieces.

The book is divided in seven sections including the basics, planning, options for investing, designing the investment portfolio, taking action, etc. As it assumes little to no prior knowledge of finance, an explanation has been provided for basic terms like inflation, shares, bonds, SIP, etc. The knowledge presented will empower the readers to plan their expenses and savings and make them understand the importance of investing the savings instead of letting them sit idle. It will also help them to achieve their key milestones in life and finally to be able to ask relevant questions before purchasing any financial product.

Ankur’s undivided attention goes to a disciplined approach towards Saving to Invest- “As one starts their careers, one should try and save at least 20% of their monthly income and increase it as their income rises over the years”. This disciplined approach will help the money to grow in order to accumulate a large amount of wealth. Planning for both short term and long term financial requirements is the key. Steps have been outlined to determine how much money will be needed for different goals like purchasing the first home, children’s education, retirement, etc. For example, an ’10 x 10’ formula has been illustrated for retiring rich. An investment of 10% of monthly income in a retirement fund and subsequent increase of 10% every year, can lead to a comfortable retirement. The book then goes on to discuss the various vehicles available to park money and spells out details for all the financial products available under growth asset classes and income asset classes. The growth asset class includes investments such as equity, real estate, alternative investments, etc. Income asset classes include FDs, bonds, PF/PPF, etc. While mutual funds are highlighted to be one of the most viable products, it has been recommended not to mix insurance products like ULIPs as an investment option. New products like ETFs, REITs, etc. are slowly gaining popularity in India, so these are the ones to watch out for.

To meet one’s desired goals, it is important to understand the portfolio construction process which combines the growth and income asset classes depending upon the relevance and suitability. The essence of designing your investment portfolio is compared to a balanced diet for a human being – “Just as your food diet plans contain a diversified mix of different types of foods, so should your financial portfolio contains a diversified mix of different types of asset classes for overall growth of your money in a safe manner”. While structuring a portfolio, one should have a long and short term focus, consider the impact of inflation and determine risk tolerance. Monitoring and rebalancing are equally important activities to stay on track. Ankur also discusses the absolutely essential stuff which everyone should be aware of – emergency fund, different types of insurance, saving taxes, etc. as well as other stuff one should know. Readers will learn more about SIP, STP, SWP, how to select the right mutual funds, things to do before retirement and utilizing bonus amount in the right way. The last section covers age based investment guidance. How should investors in their 20s,30s…50s should invest.

Overall, the book will definitely act as a guide for first-time investors and help them in securing their financial health. Although the investors jobs’ will just start as being apprised about the various investment products is not enough, they should be in a comfortable position to perform due diligence on new financial advisors or other agents.

Ankur Kapur deserves a special mention as he is amongst a very few Indian CFA charter holders to have written a book. When asked about the motivation behind authoring a book, he mentioned , “I believe in growing by sharing knowledge than by charging for information asymmetry”. Indeed a noble thought put firmly into action! CFA Society India would like to congratulate Ankur and wish him the very best for future endeavours.

-SC