Ravi Kumar Jha, managing director and CEO, LIC Mutual Fund, shared invaluable insights into successful investing at Outlook Money’s 40After40 Retirement Expo. He underlined discipline, duration, diversification, and diligence as the four key components of a successful investment strategy.
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LearningTranscript
00:00Thank you so much for joining us so I think in order to discuss how to become a successful
00:08investor we have to discuss a very very viral concept which is popular getting very popular
00:15these days which is the concept of SIP short for systematic investment plan so do you think
00:23SIPs truly are the mantra for successful investing first of all a very good evening to all the audience
00:31and the participants in this hall and I welcome on behalf of LIC mutual fund also all of you and
00:38express my sincere thanks to Outlook money and the entire team for inviting me personally
00:42coming to success story of SIP I need not to highlight because it is it is already highlighted
00:50in the media and if you will see the journey from December 2016 December 2016 the SIP monthly
00:59SIP pipeline was around 4000 crores and just over a period of eight years to December 2024
01:07the SIP amount has risen to more than 26459 crores with a CAGR of 26.75 percent so this
01:16is one data which is extremely important and very vital secondly if you'll ask me about
01:21the SIP AUM so there also I'll tell you in March 2023 it was around 6.83 lakhs and December
01:3024 if you'll say it's almost around 13 crores 13 lakh crores of amount and which comes to 20
01:38percent of the total AUM of the industry also so and it has more than doubled just in a period
01:45of less than two years so as regards SIP people have understood the citizens of India has understood
01:54the Millennials the Zenzi they have understood very clearly the benefit of SIP how how they
02:02are going to benefit from the power of compounding etc and there has been a lot of trust and and and
02:08the popularity of the SIP because of this but success does not I'll say success does not in encompass only
02:19SIP there are other other products also in the market like LIC policies like NPS or bank FDs also so
02:27there are other segments of financial savings which which can also be taken as part of success story
02:35because we must have a holistic outlook of the entire success journey and and finally
02:42the real success I will say especially in investment is about investment about patience
02:49and due diligence because unless we have patience unless we have discipline
02:58if you are not investing into that then we will be losing the benefit of the wealth creation which is
03:03very very important so any investment we have to do the real success will come only when we will have
03:10patience due discipline and and a zeal to ensure that we have a wealth kitty over a period of time
03:18very rightly said sir and you have quoted so much data that speaks for the popularity of SIP itself
03:23but sir recently SIPs have do come under a lot of fire why do you think that is so see with the popularity of
03:30anything it's traditionally also at our home also in society also if someone some person will become
03:39very popular there will be naturally a lot of jealousy and envy cause of envy also so likewise similar is
03:46the story of SIP why I am telling this because if all of you may remember around two years back even Mercedes
03:54CEO he also said that people are preferring SIP rather than taking Mercedes Benz car and currently if
04:02you see banks have raised a point a point that their CASA ratio is going down because people are investing
04:10into mutual funds and particularly SIP now now friends I'll tell you investors have a right to invest in
04:19any place where they invest and particularly CASA if you will tell me CASA is a very low cost deposit of
04:28the banks with minimal interest rate of around two percent two point seven percent two point seven five
04:34percent or at the most three percent and therefore people or the citizens or the millennials and Z they
04:41always explore explore good investment avenues and naturally equity market stock market mutual fund
04:49SIP will always be a flavor of taste for for each one of them to invest and get more and more returns
04:57for their money so this is one segment which I wanted to tell you there is another segment which I want to
05:03highlight all of you that we in mutual fund we face everybody all of you appreciate and you may be
05:11saying that mutual fund every month is speaking a new height but there is a second aspect that many people
05:19also terminate their SIP or they stop their SIP and in this market downturn also many people may have might be
05:28doing that either they would have achieved their financial goals or because they might have got emotional they
05:35they may be seeing the returns in a negative territory segment they may be doing it in fact I'll tell you in
05:42April to in March 2023 there were 8.39 crore of SIP numbers and in the last year in in this financial year
05:52April say December to around 5.4 crore new SIP has taken place but the the stoppages or the termination of SIP is
06:01almost 3.46 crores which is 41% of that 8.39 crores so though SIP numbers have grown to more than 10.32 crores
06:12but it is also a fact that good number of investors are stopping stoppaging or stopping their SIP or
06:20terminating their SIP for their own specific reasons what I want to emphasize that if the market is going
06:30down we should not get jittery or emotional rather that is the time that we should invest more into
06:37our SIP lump sum etc so that we can take benefit of the rupee cost averaging rupee cost averaging is
06:44a marvelous concept that at lower prices it gives higher number of units in that particular folio in
06:55that particular account and that gives lot of push to to the build up of the compounding the power of
07:02compounding of SIP and and that power of compounding of SIP grew in lips and bounds if we don't time the
07:11market we we should be disciplined and keep on investing regularly in SIP as an RDA account etc so
07:19that we are able to get full benefit of the SIP and that is the most important thing this is what
07:25the second thing which I wanted to highlight I wanted to request all the investors through this medium
07:30that they should not stop their SIP pause their SIP rather they should this is the time that they
07:36should they should invest more they should go for a step up SIP they should go for topping up their SIP
07:43so that the ultimate benefit the wealth creation can be more pronounced and more strong than what
07:49it is you are right sir discontinuation perhaps there are many reasons attached to it and lack of
07:55awareness or understanding could be one of those and along those lines there are over 2000 mutual funds
08:02currently in the market and those are too many options for a retail investor so how do you think
08:07one can make the right choice given there are so many options layered up ahead of them see coming to the
08:12right choice it's it's not an easy answer it's a difficult answer because there are more than 1500
08:20or as madam very rightly said around 2000 SIP schemes but if you take an advisor with you the task becomes
08:28very easy this is what I'll suggest first and foremost to all the investors particularly especially the
08:34newer newer ones they want to start their investment journey if they can take the support
08:42of the mutual fund distributor or an advisor that will be wonderful because that advisor will have
08:49a wealth of experience of 10 15 20 years and he can guide beautifully in taking up the SIP where to
08:56invest what to invest all these things will be taken care of that particular person so this is one thing
09:02which is extremely important and this I would like to highlight second thing is that once I have selected an
09:10advisor and I am going with him I must determine my needs I am going with him I must determine my needs
09:14I am going with him whether I want to purchase a house whether I want to as rightly the theme of this
09:27event is 40 after 40 so whether I want to make planning for my retirement so there are different
09:33financial goals that can that an individual can select for himself so it's extremely important
09:40that the determination of the needs determination of the financial goals are extremely important and
09:46the next point is time horizon what is the time horizon for which I want to invest a short term duration
09:55then debt funds will be ideal or otherwise if a person wants to invest that financial goal
10:01financial planning is for a longer period of time three years five years ten years then naturally equity
10:07can be the flavor of the of the of the selection that that that person can opt for and then finally
10:15if he selects that equity is one of his choice product he wants to invest and that is the that is
10:21the the report which comes from amphi also we see that almost 81 percent more than 81 percent of the people's
10:28choices equity only so if equity is the choice then they have to decide whether they want to go for
10:34large cap mid cap or small cap large cap will give moderate returns with lot of stability mid and small
10:42cap can give high growth but there can be volatility so a longer term there in the mid cap and small cap
10:49segment will naturally give lot of uh success to that person in creation of the wealth kitty which he has
10:56planned for himself so so my request will be these three four things which i said that an advisor
11:04either a parent father mother who knows about the financial investing if they are not aware then the
11:10advisor the mutual fund distributor is should be the right person to guide him then he should have his
11:16financial goals his needs the duration cons asset linear diversification of assets these are i think the
11:24success mantras for investing successfully in mutual funds absolutely sir but there's one thing that we must
11:32also discuss here you have mentioned key if we are confused perhaps the best strategy would be to go to a
11:38financial advisor and unfortunately or fortunately i don't know uh we have a lot of advisors
11:45for influencers as we call them on social media gen z perhaps uh get way more influenced by them perhaps
11:51not a seasoned investor but new investors may get so what is your advice for them how to steer away from
11:57these kind of advisories one has to carefully select the advisor what kind of advisor either your parent
12:04family members or from your office where you are working from your circle of colleagues that you are
12:10having you should find out if somebody is there somebody is having already having an advisor and who
12:17has been a trusted advisor for 5 10 20 years lic agent or a mutual fund distributor who is also doing the
12:24job of mutual fund so and and people will give in india to suggestion dene ki kami nahi hai i mean
12:31here you are very rightly so you are very rightly so you are very rightly so you are a suggestion
12:34or not even if you are not even if you are not a thousand suggestions for suggestions so why
12:38do we not have to invest in such a way if we are investing in our money then it is very
12:43important that we are the right advisor or mutual fund distributor and if we are the right advisor
12:48and if we are the right advisor if we are not aware of where we are then we will be in the office
12:52so all these things can be all these resources can be tapped to opt for the best advisor thank you for
13:07that sir now we'll move on to something which is also very important and an old saying will summarize
13:13that we should never put all our fruits in one basket so there are so many options and there are too many
13:19ways to invest how should one approach asset allocation when they are thinking sip so coming
13:24to i i'll take the example of sports or cricket only uh cricket if you will see a team a country or a
13:31team will always have good batsman good baller a good wicket keeper all-rounders so a mix of everything
13:40will be there so that a balanced team is there a team which is very much balanced and who can win
13:45matches for the country likewise similarly investment also in financial world also
13:51it's very very important to have a diversified asset allocation it should be in equity debt gold silver
13:59etc so that a person can get best of the returns at all times because it is not possible that all the
14:06segments will will fire up at one one go one year equity will be very good next year debt can be very
14:13good third year gold can be very good so likewise there will be turn by turn some will be doing
14:18well some will not be doing well but it's very simple to say that one must do uh asset allocation
14:27diversified asset allocation but it's a very complex job because the the market realities are complex
14:34and proper professional guidance is very rare to come so therefore my suggestion will be that in like in
14:41lic mutual fund we have a multi-asset allocation fund there are some other amcs who are having
14:47multi-asset allocation fund there are professional fund managers who are doing this on behalf of the
14:53investors so one need not to worry about uh about asset allocation or one need not worry about how to
15:02go about in selecting different and what component should be there one should simply try to invest on in
15:09those funds uh asset multi-asset allocation fund or hybrid funds hybrid funds are also there wherein
15:16equity and debt component are there so there will be always a mix of these products which are available
15:21readily in the market and there are professional fund managers in every amc who are doing this job
15:26exceed excellently with good returns good healthy balance returns and so people if they will be investing
15:33that they will be making a lot of money and lot of good wealth creation for themselves and for their families
15:39absolutely sir so talking about good and bad investment uh how do you think uh is there a magic
15:46figure that defines it will be best there is no magic figure for returns uh i'll say
15:53uh but uh like we have undertaken study in our own emc we find that on an average uh if one is uh remaining
16:03invested into equity funds he'll be getting a cagr of uh compounded annual growth rate of 12 to 14 percent
16:1015 percent that is the rate that he or she will be getting so so my suggestion will be there are four days
16:19that is one of the first two days is discipline anushasana investment second is duration
16:28third is diversification so diversify different assets so that you you are always above the curve
16:37and finally patience due diligence diligence should be kept if we are keeping these four things in our mind
16:45i think uh the magic returns the magic the magic of power of compounding will definitely accrue
16:53in their folios as whether it is sip lump sum whatever
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