In the 1980s and 90s, it was basic literacy that took the country by storm. In the 2000s, it was internet literacy. Today, as we see the fruits of these movements taking shape, we stand on the cusp of yet another literacy movement – that of financial literacy and awareness. It would be an understatement to say that financial awareness would become a hygiene factor in basic education moving forward. It would become an integral part of an individual’s professional success and personal security.

Providing insights on the power of financial awareness for professional success at the recently concluded Femvest 2021 virtual summit on women’s financial empowerment, Mr. Khushro Bulsara, Head – Investors Protection Fund (IPF) at BSE India, spoke on ‘Why Financial Awareness is a Non-Negotiable Today for Personal Success’.

BSE India and its objectives

BSE has completed 145 glorious years of its existence in June 2020. The BSE IPF was created in July 1986 and has also completed 34 years of its existence. The IPF was primarily set up under directives of Ministry of Corporate Affairs.

The purpose behind it was that whenever any investor’s or client’s broker defaults in payment of his/her settlement liabilities, then the investor can file a claim. If the transaction is a valid transaction and not done as a private transaction, up to Rs. 15 lakhs can be claimed.

Financial awareness and Investor education is basically explaining to people the basics of what they should and shouldn’t do.

Mr. Khushro stated that financial awareness for professional success is an absolute must for anybody and everybody, whether you are a student, professional, homemaker or anybody. “In the pandemic, it was really difficult for all of us to achieve our daily goals. The power of inflation is such that it will reduce the value of your money. So you have to increasingly invest it in such avenues that will give you such returns that you may go above the rate of inflation.”

Women’s increasing interest in equity investments

The typical thinking earlier used to be that males in the family will earn and women are going to take care of the house. So this thinking has gone through a huge transformational change. Today, we see a lot of women professionals and empowered women taking the charge of their own finances.

It was mandated that every board of listed companies should have one woman director on board to ensure gender diversity. According to an article by ETI in September 2020, women’s participation in the equity market has surged following the COVID-19 pandemic.

Upstox one of the most reliable trading platform witnessed growth of 32% in accounts opened by women between April to June 2020. 70℅ of these account openers were first time investors. Sensex, which is the index that shows how the markets perform boomeranged and touched 48,000 for the first time.

This helped spark interest among the young crowd and women. “Earlier, if you were to do KYC for trading account or demat account, you had to go to the broker’s office for the in-person verification. After the launch of e-KYC, it has led to a fantastic surge in the number of trading or demat accounts,” said Mr. Khushro.

Do’s and don’ts for online trading

It’s very essential to know the do’s and don’ts before stepping into online trading because there are so many scammers waiting to wipe out your bank balance. This is a very crucial part of financial awareness for professional success.

Mr. Khushro explained, “As it is said, don’t put all your eggs in one basket. Similarly, ‘diversify your risks’. One rule that all should follow is 100 minus your age is the amount you should invest in equity markets. The rest you can invest in  gold in the sense of demat holdings in gold.”

The amount you should be investing in equity as your age increases should be lower and lower. SIP is an absolute buzzword because SIP is one sure shot way of harnessing the power of compounding. “Economics in nothing but common sense made difficult,” quipped Mr. Khushro.

Important tips for trading

Mr. Khushro also shared some important things to keep in mind before trading:

▪ Deal with only SEBI registered brokers. Do not deal with anybody unauthorized even if you know them very well.

▪ Don’t trust any hot investment tips given to you. Do your own research, and do your own due diligence. Don’t just rely on someone’s mere investments tips because what works for others might not work for you.

▪ Get very clear about brokerage fees and commission charged by brokers. Read all the voluntary clauses in the broker client agreement you sign.

▪ Obtain all the copies you have signed on from the broker.

▪ Don’t share your internet and bank passwords with anybody.

▪ Always keep your broker updated with your active mobile number and email address.

Mr. Khushro concluded with this quote:

Financial awareness is not a single mantra or anything. It is just common sense, which is applied in a logical and proper manner.