Radhika Gupta, MD and CEO of Edelweiss Mutual Fund, has introduced a progressive savings framework in her latest book, 'Mango Millionaire', co-authored with Niranjan Avasthi. The book aims to provide practical financial planning advice for ordinary individuals, focusing on habit formation and disciplined saving.

The '10-30-50' Savings Rule

Gupta's '10-30-50' rule proposes a graduated approach to savings:

• 10% of income in your twenties
• 30% in your thirties and forties
• 50% from your forties onwards

This framework acknowledges the changing financial capacities and responsibilities individuals face throughout their lives, offering a flexible yet structured approach to long-term financial planning.

Savings as 'Cricket Net Practice'

Gupta compares the act of saving to cricket net practice, emphasizing the importance of building financial discipline before venturing into more complex investment strategies. The idea is to cultivate good saving habits as a foundation for future financial success.

'Savings Deducted at Source' (SDS) System

One of the key concepts introduced in the book is the 'Savings Deducted at Source' (SDS) system. This automated approach to savings is likened to the Tax Deducted at Source (TDS) system, familiar to many Indian taxpayers. The SDS system proposes:

• Automatic redirection of money to savings instruments
• Funds channeled into Systematic Investment Plans (SIPs), Recurring Deposits (RDs), or Fixed Deposits (FDs)
• Savings occur before spending, ensuring consistency and discipline

Practical Approach to Financial Planning

'Mango Millionaire' takes a pragmatic stance on personal finance:

• Focuses on forming good financial habits rather than adhering to strict percentages initially
• Acknowledges challenges such as lower salaries in early career stages
• Recognizes the impact of lifestyle expenses on saving capacity
• Emphasizes the importance of 'paying your future self' through consistent savings

Addressing Real-World Challenges

Gupta's approach in the book demonstrates an understanding of the real-world challenges faced by individuals in their financial journeys:

• Adapts savings goals to different life stages
• Provides a framework that can be adjusted based on individual circumstances
• Encourages starting the savings habit early, even if the amounts are small

The '10-30-50' rule and the concepts presented in 'Mango Millionaire' offer a fresh perspective on personal finance, tailored to the Indian context. By combining practical advice with innovative ideas like the SDS system, Gupta and Avasthi aim to make financial planning more accessible and achievable for the average person.

As financial literacy continues to gain importance, books like 'Mango Millionaire' play a crucial role in educating and empowering individuals to take control of their financial futures. The insights shared by Radhika Gupta, drawing from her experience as a leader in the mutual fund industry, provide valuable guidance for those looking to build a solid financial foundation.

Edelweiss Financial Services Limited (EFSL) has announced a strategic investment by WestBridge Capital in its asset management arm, Edelweiss Mutual Fund. The deal, valued at Rs 450 crore for a 15% stake, places Edelweiss Mutual Fund's valuation at Rs 3,000 crore.

Transaction Details

The transaction values Edelweiss Mutual Fund at 57 times its earnings, aligning with industry benchmarks of 30x to 60x. Edelweiss Mutual Fund reported a profit after tax of Rs 53.00 crore and Rs 28.00 crore in two consecutive periods, demonstrating strong momentum and improved operating leverage.

Growth and Performance

Edelweiss Mutual Fund has shown impressive growth:

• Total Assets Under Management (AUM) reached Rs 1,52,200.00 crore
• 44% Compound Annual Growth Rate (CAGR) over five years
• Equity AUM grew by 53% to Rs 72,600.00 crore
• Climbed from 36th to 13th rank among Indian mutual funds over a decade

Strategic Implications

Rashesh Shah, Chairman & MD of EFSL, commented on the partnership: "Welcoming WestBridge Capital as a strategic partner is a timely step in the value-creation journey at Edelweiss MF. We have built a robust, innovation-led mutual fund franchise with strong equity momentum. This transaction reflects the confidence in the long-term potential of our Mutual Fund business."

Radhika Gupta, MD & CEO of Edelweiss MF, expressed enthusiasm about the partnership: "We are delighted to partner with WestBridge Capital - a likeminded and long-term partner - whose strategic insights and ecosystem will accelerate our next phase of growth."

About WestBridge Capital

WestBridge Capital is a global investment firm with over $7 billion in assets under management. The firm has a track record of over 25 years in partnering with transformative entrepreneurs across both private and public markets.

Deepak Ramineedi, Partner at WestBridge Capital, stated: "We believe financialization of savings is a massive industry tailwind and strongly believe Edelweiss MF is very well placed to benefit from the same. We look forward to supporting the team in scaling the business further."

Regulatory Approvals

The transaction is subject to approvals from the Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI), along with other customary approvals.

Conclusion

This strategic investment by WestBridge Capital in Edelweiss Mutual Fund marks a significant milestone in the Indian asset management industry. It underscores the growing attractiveness of the mutual fund sector in India and the potential for further growth and consolidation in the market.