Volatility is the price investors pay for compounding: Dezerv co-founder Sandeep Jethwani

Sandeep Jethwani, co-founder of wealth management firm Dezerv, on Monday said that market volatility is an unavoidable part of long-term wealth creation, cautioning investors against making emotional decisions during extreme market movements.

Speaking during a fireside chat titled ‘Building Portfolios to Beat Volatility’ at the Dezerv Wealth Summit, in conversation with Moneycontrol’s N Mahalaxmi, Jethwani said that investors often underestimate volatility while investing, even though it plays a critical role in compounding returns.

“While investing, nobody envisages volatility. In a sense, volatility is the price you pay for compounding,” Jethwani said.

He warned that poor investment decisions are most often taken during periods of sharp market swings—both on the upside and the downside. “Bad decisions are taken during periods of extreme volatility. It’s either when markets are doing exceptionally well, when we get carried away and over-invest, or when things are down and we tend to exit the markets prematurely,” he added.

Jethwani also pointed to a different kind of volatility experienced in the Indian market—extended phases of low or no returns—which he said severely tests investor patience. “India has seen another form of volatility where we see no returns for an extended period of time. This is the time when people’s patience gets tested,” he said.

He emphasised that disciplined investing and the ability to stay invested during uncertain phases are key to building resilient portfolios and achieving long-term financial goals.

At the Dezerv Wealth Summit 2025, Sandeep Jethwani, co-founder of Dezerv, stressed the importance of patience and disciplined investing, even as equity market returns have lagged fixed deposits over the past year.

Speaking during a session, Jethwani said wealth managers have a critical role in hand-holding investors through periods of underperformance and helping them stay focused on long-term goals. “You don’t know when markets can rally 5%. Staying invested is important,” he said.

Jethwani cautioned against judging equity markets based on short-term returns and urged investors to align their expectations with appropriate time horizons. He noted that impatience, rather than panic exits, is currently the bigger challenge for investors.

“People are not exiting markets, but impatience persists,” he said, adding that wealth managers must explain that recent performance does not dictate future outcomes. “What happened in the previous year is not a reflection of what will happen in the next year.”

Highlighting the need for diversification, Jethwani said equities should not be the sole asset class in a portfolio. “Fixed income has done recently well in India, gold and silver also merit a reasonable allocation of up to 10% in the portfolio, and then there are international assets,” he said.