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Jun 18, 2012, 12.45 PM IST
In an initiative to educate masses and create investment awarness, CNBC-TV18 in association with the National Stock Exchange (NSE) brings you Informed Investor.
A series where the best financial minds clear doubts about investment, solve queries and educate the masses. In this session they specifically interact with the members of healthcare industry.
Nitin Rakesh, managing director and chief executive officer of Motilal Oswal Asset Management Company and Sandeep J Shah, chief executive officer Sampriti Capital are two financial minds who will educate and solve investment issues of people engaged in the healthcare sector.
A research conducted by reporters and researchers reveal that investment practice among doctors. The data showed that 50% want to avoid risk completely, 35% are cautious and only 16% are willing to take risk.
This contrasts with 60% of those we surveyed who said that they want to create wealth proactively and only 25% of those we surveyed wanted to do it for tax saving reasons.
Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying videos.
Q: We have seen retail investors who have stayed away from markets for so long. How much longer is this trend likely to continue?
Rakesh: The issue is what it takes for us to bring them into the market. As long as we are able to communicate that they have to take proactive efforts to build wealth in the long term, there is no free lunch and one have to work hard to make money grow, be attentive, focused and understand the products in which one is investing and there are no shortcut.
Q: Only 7% of those surveyed were interested in either equity or mutual fund. Their preferred choice of investment was a bank fixed deposit and an insurance. Is it just that as a country we are savers and not investors or is there more to it. What is missing?
Shah: The most important thing is to educate the investor. There are instruments which can help you create returns and wealth and beat inflation. There are two ways to create real wealth. One, is to become a successful businessman or a best doctor in your field. If you become the best then you will become wealthy. Or, invest in somebody who is building a world class business. The only way to do that is equities either through a mutual fund, PMS or directly. Importantly, there is no understanding of the process required of investing, the vehicles, the methods for investing and you need to equip yourself.
Q: I have just completed training as an intern and now a doctor. What should be the ideal portfolio with medium risk and some assured returns?
Rakesh: First, you should identify your expenses and the available investable surplus. Once the surplus is identified, then look how you can break that investable surplus down into categories of investment, the duration of investment and finally the expectation from investment.
Any advisor or you can evaluate it easily. If you want fixed and regular income you can invest on bonds, bond funds, government securities, fixed deposits, postal certificates and PPF. You may not get it on the day you want it but it will keep accumulating to you. But the real wealth will not get created by this because that's will merely meet the inflation or the amount of price hike that we live with in this country.
Real wealth will be created only when you invest in the equity markets. You may not do it directly but you have to do it through instruments like mutual funds, portfolio management schemes or buy the index. For example take Rs 100 that you need to invest, if you are 30 years of old as a thumb rule again that doesn’t apply to everybody, Rs 70 should go into equity because you have that much more time before you retire, because equity will give you returns in a erratic manner but in the longer term it should give you returns better than any other product and the rest should go into fixed income product because when you retire at 65 it well give you a large enough corpus.
Q: Would you advice buying the index or sector specific or specific stock because of the way markets are currently?
Shah: When one wants to invest in equities, the first thing one should ask oneself that do I have the time and the ability to understand the stock market? If I don't do I have the ability and the time to analyse companies in the pharmaceutical industry or companies that are related in healthcare? If yes, then buy equities directly. If you don’t have the time and the ability then you are better off either buying an index fund or a mutual fund which has a good track record or go for a portfolio management product. The most important thing is to find an advisor whom you trust.
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