#OutlookEvents | At IDFC FIRST Bank presents Outlook Money 40 After 40, Dhirendra Kumar, CEO, Value Research, highlights the illusion of easy money and the dangers of speculation. While risky bets may feel exciting in the short term, true financial success comes from disciplined investing and understanding the power of compounding. Thoughtful financial choices today create lasting wealth for the future.
00:02If you look at what AI is doing, we will have, you know, we are answering.
00:07And the principles were actually, you know, the seeds of that were sown then.
00:13He's considered to be, you know, that Turing Award is considered to be a Nobel Prize in computing.
00:19But if you look at the principle that he decided, you know, he framed,
00:23that breaking the question into smallest element, putting it together.
00:28And that is very much true for personal finance.
00:31If you look at, if you break this 10 crore thing into smaller pieces,
00:38entry milestones, and also let me just bring in some degree of realism in this.
00:45Everybody came and talked about the numbers and this and asset allocation, whatever,
00:50equity returns, even the Sensex return, which I think, you know,
00:54which Samir Arora said that half of the stocks in Sensex are unable to beat it.
01:00That is the design of the average.
01:02And if you go by that, even the dumb Sensex of, you know, without the dividends,
01:10without reinvesting those dividends,
01:11has given a return of about 18% since its invention in 1978, 18% annualized.
01:20And if somebody would have invested 50,000 rupees a month,
01:24of course, 50,000 rupees a month 25 years ago would have been very significant.
01:27But assuming that ignoring all, no step up, nothing, 50,000 rupees a month done consistently for 25 years,
01:37earning 12%, which is two-third of the return that Sensex has given without the dividend,
01:43will translate into 10 crore.
01:45So, unfortunately, we don't come across too many 10 crore pati who were investing in Sensex for a variety of reasons.
01:53There wasn't a Sensex fund available.
01:55Mutual funds were not sold the way they are being sold.
01:58Mutual funds were not designed.
02:00You know, when I started value research, mutual fund was a seasonal phenomenon.
02:05Once in a while, there will be a fund which will be launched and people will invest.
02:08Today, you know, you give a standing instruction to your bank to enable a, you know, 10,000 rupee SIP,
02:16and it happens, and it happens seamlessly.
02:18Most of the people who end up wealthy are the ones who are not monitoring it every day.
02:23The reward of forgetting it, putting it, an ability to automate it.
02:28So, I think it is eminently possible.
02:30And not only possible, I think it is necessary to be embarking on such an ambitious thing.
02:36If at all, it is ambitious.
02:38But, now it comes into the realm of possibility, but the problem with my peers and the generation,
02:46me included myself, that what the problem is that we are a generation that, of course, lacks patience.
02:53And so, how can we, how can someone like me convince my peers or even myself to start a journey like that?
03:02Is there, is a, what advice would you give to us to start that journey of discipline and patience and everything?
03:11You guys are too smart.
03:12I don't think I have the courage to give you advice.
03:15But, I would suggest a few things.
03:17Don't resist your temptation.
03:19Try out things.
03:21No, temptations of what?
03:22Like, what kind of temptations?
03:23I'll tell you the temptations.
03:24The temptation is, you know, crypto can be very exciting.
03:27Eating out tomorrow could be very exciting with your friends.
03:32So, you know, that is consumption.
03:34Third is that, you know, looking at the, because, you know, today mutual funds are sold as a story.
03:39Yeah.
03:39A thematic fund, a defense fund, or consumer fund, or this thing, you know, which will look exciting.
03:44And, it's not all that bad.
03:46You know, I would not like it, but it's not all that bad simply because, you know, if you invest in a mutual fund, if you achieve two, three goals, which is you are investing regularly, you are diversifying, and you are able to stick around for a couple of years.
04:02Even a lousy fund manager can't really hurt you because by virtue of that diversification, by virtue of your long-term orientation, you end up being a winner anyway.
04:14But my worry will be, you know, and in the initial stages, in somebody who is, you know, anybody who is in your phase of life, my suggestion to them will be do everything but start the habit of, you know, doing 500 rupees, 5,000 rupees, 1,000 rupees, whatever it be.
04:32Because the initial stage is actually habit formation.
04:35Okay.
04:36Most people expect magic to happen.
04:39Magic is not going to happen anyway.
04:41And, in fact, if you get very excited about the market, that is what I have learned in the last 30 years, that every time investors get excited about the market, it is an inopportune time to get excited.
04:54It turns out to be wrong in hindsight.
04:56But it gets extremely difficult to resist that, whether it was 1992, 2001, and things like that.
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