Mehrab Irani outlines the path to financial freedom in 'Mad Money Journey'

Crossword bookstore at Kemps Corner, Mumbai was surprisingly packed for a book launch that boasted of no A-list Bollywood star. The launch of Mehrab Irani's Mad Money Journey on Friday evening was attended by well known trader Rakesh Jhujhunwala and TV anchor and comedian Cyrus Broacha. 

Irani  is the General Manager of Tata Investment Corporation. His book, published by Jaico, seeks to impart lessons on managing finances to people from all walks of life. Dubbed as finance fiction, the book sees the protagonist go on an adventure learning lessons of financial emancipation. 

While a highlight of the event could have been the interaction between Jhunjhunwala and Irani, much of the discussion remained casual banter. Examples regarding lack of financial wisdom seemed to mostly involve women. From daughters who didn't care how they spent money, to 'women with rich husbands' who had the luxury of not caring about money. Talking about the need for financial security, Broacha joked about the extent to which Parsis went to take care of money. 

Irani espoused about the need for financial freedom and how it was not as difficult a task. dna caught up with Irani on his book and his motivations to write it-

After writing a non-fiction book, 10 Commandments of Financial Freedom, why did you turn  to fiction?

If anybody reads my first book 10 Commandments of Financial Freedom, they would understand the main aim was to earn financial freedom. That was non-fiction which was nevertheless simply written. But I felt that someone has to have the interest to pick it up and read it. And today there is a lot of misconception about money. If you ask someone what are you doing about money and financial future, people don’t have concrete answers for it. But it is essential to connect with money as it often comes between man and his dreams. In the name of safety and security, many of us sacrifice our dreams.  Most of us have become financial slaves: wage slave of employer, tax slave of the government and loan slave of the bank. It is necessary to come out of it.

I understood the necessity to connect with everybody and I know the importance of stories and fables to convey what I wanted to. When you read the book you connect with the characters and find their own images in the characters.  There is suspense, drama, climax: and through the entertainment, people will learn the lessons.

If you look at the common perception about the stock market, people see it as a great gamble from which they would rather stay away. Do you see this perception changing in a hurry? Do you believe financial savings will be converted into financial investment?

First step in the financial journey is to earn money. Once that is done, the next step is to save it from financial predators like income tax department. Once you save, you have to convert this to investment. Many people confuse saving with investing. If you save in assets like fixed deposits which depreciate with inflation and will be robbed by income tax, we will never be able to achieve financial freedom.  You put some money in bonds or deposits, but not all of it. Asset allocation is the most important decision, but also invest in those assets beneficial against inflation. Equity is one such option, as the profits of the companies will reflect the inflation rates. Their valuation will increase over time. So your portfolio should have investment in fixed income asset and those that benefit from inflation. It will give tax protection; for example, equity investment over long time give you tax benefits.

I have read you columns on fund managers, where you speak of human vulnerability of managers. But do you see people venturing out to invest themselves, or always depending on an intermediary to do it on their behalf?

If you don’t have the time or inclination to decide, you can give the money to some mutual fund because it is convenient. There are too many mutual fund schemes around, and the mistake that people make is they don’t dig deeper. You have to see the fund manager’s track records, mutual fund’s track record. If you see in India or US, statistics shows, 90% of profits come out of asset allocation and 10% out of stock selection. If the person is doing proper asset allocation, 90% of his concerns are taken care of. So proper allocation between debt, equity, gold etc will to be done. Coming back to equity, for a novice, buying the index is enough. Because 75% of fund managers underperforms the index.

One question concerns the format of the book. At the end of each chapter, you have provided a break, a tutorial of sorts. Why would break the pattern of fiction to delve into non fiction?

When you read the book you will realise these are not tutorials. They are called wisdoms. The protagonist travels around the world after being saved by a childhood friend, and meets different kinds of people. He stays with them, eats their food and leads their lifestyles. At the end of it, he learns something from each of those meetings. This wisdom he receives from each person that is given.  It goes beyond finances, and is spiritual as well. 

Do you think your book cuts across all classes?

Yes, I think whether a person is rich or belongs to middle class or poor, everybody can relate to this. Today, the rich is becoming richer, middle class is getting into debt and the poor is becoming poorer. That was my primary idea: I feel pained that people earn, but do not achieve financial freedom.