In this episode of the NSE Invest O Cast, Moneycontrol editor Santosh Nair wraps up the series.
Hrishi K: Hello and welcome to another episode of NSE Presents: Invest – O- Cast (An exclusive investor podcast) Powered by MoneyControl. My name is Hrishi K and I am your host Hrishi K on the podcast is a very special one for all of us. It is the final podcast of the Invest-O-Cast series. We’ve told you how to make your money, where to save your money, what are the levels of risk that are suited for you, how to educate your children on the importance of money, what to read to make yourself smarter… whoa! That’s quite a list and it isn’t done. The last couple of months have gone by so quickly. We are already in the new financial year and it didn’t really strike us how far we have come so quickly. The National Stock Exchange does so much for investor awareness and this series of podcasts has been right up there in educating retail investors and giving them a sound foundation for their investing strategies.
India is growing and so should your wealth. It’s now the final episode of the series and we are going to end the series with the same man who kick started it: The Editor of Moneycontrol - Santosh Nair.
Hi Santosh. It's great meeting you again. How are you?
Santosh Nair: I am doing good Hrishi, thank you.
Hrishi K: In between our meetings, we have had some great names on the show, people who have given our listeners a completely new perspective on personal finance and investing. It's been such a good ride, the reverse of a roller-coaster actually, we've only gone up! Haha.
Santosh Nair: Yes, Hrishi. It was indeed a pleasure to be a part of this series and even after having followed the stock market and personal finance space closely for so many years you realise that there is always something new to learn. Listening to experts talk about how to manage your money well you really feel good and there was something very interesting to learn from each of the speakers.
Hrishi K: National Stock Exchange (NSE) with the help of Invest–O–Cast (An exclusive investor podcast) Powered by Moneycontrol is committed to break the limitations of geographical boundaries and reach investors across the country.
A quick recap for our listeners about Santosh. He's a veteran financial journalist. Santosh oversees content on the Moneycontrol website, he writes on trends and policies related to the stock market and profiles investment gurus. He's been writing on the stock market for 22 years now and has authored a book titled, "Bulls, Bears and Other Beasts". He's been with Moneycontrol for eight years, and he's the perfect person to recap the Invest-O-Cast journey.
Santosh Nair: Thanks for all the kind words. Yes, indeed we had a variety of experts talking on various asset classes - equities, debts commodities. More importantly the series had advice for various profiles of investors. So depending on whether you are a pensioner, a housewife, student or parents looking to teach the value of money to his child. I think just about anybody who tuned into this podcast had something interesting to learn and I think that should hopefully go a long way in making people much more informed investor and being careful with their money.
Hrishi K: Well, this is your second episode of the series. But as a listener you have been very actively involved, you have been having a lesson. What are the top 3 takeaways for you from the series Santosh?
Santosh Nair: Well Hrishi that is a tough question. Now you saying top 3 in fact there are far more. I would say that for me there were at least 4, I would list them this way. The one I would say is disciplined and it doesn’t matter how much you putting aside every month I would say that you should set aside money consistently month after month. The second thing I would say you need to define your risk as well as your expectation. You must have an idea of how much you are prepared to lose that is very important and that is something that people don’t pay attention to, so that is something you need to keep in mind. Then comes the expectation part, Hrishi I think often what happens is we get swayed by what we hear about other people talking about the kind of returns they have made from the stock market, just to give an example but they are not always giving the right picture and specifically in the case of stock market a lot of people do feel where you can go and quickly grow your money, well it never works that way. So I think you need to temper your expectation that is very very vital. More importantly you also need to be prepared to take that occasional loss, if you are investing in a risk asset like equities you should be aware that there is a good chance that you might lose some money but when that happens you should be prepared for it and you shouldn’t be too hard. The risk is far lower when you look at some of the other asset classes particularly debt but they are also… now if you see track the recent events you will find that even debt is not entirely risk free. So be prepared to take the occasional loss if it comes and the most important one I would say is that you need to be very patient because for compounding to have its full effect, it takes a long time and you need to stay the course, be disciplined, keep investing month after month. There may be a period where pretty much nothing is happening but you shouldn’t be discouraged, so patience is as important as discipline I would say Hrishi.
Hrishi K: Ok, now we had a very interesting episode with Dipan Mehta Santosh, he was talking about the uncertainties of 2019. We are actually bang in the middle of the first of those uncertainties, which is bang in the middle of the elections. So how should investors react right now? We all know it’s going to be an acid test, the challenges, the notions, and the very notional risk appetite?
Santosh Nair: So Hrishi I would put it this way. I have been tracking the market for quite some time now and I have seen lot of elections, assembly elections and general elections. So what I observed in general is that market tends to react to these events in the short term, over the longer term these events really don’t matter, so of course there are exceptions to the rule. Now say for instance you know that a particular company actually depends upon political patronage and it is because of this that it’s been reporting some really good numbers, probably that company could be in trouble, whenever there is a change of government at the center or even at the state level as we have seen in the case of cable television companies in Tamil Nadu but on the whole elections don’t really make a difference to your portfolio I think everything averages out over a long period. So my advice would be don’t focus too much on short term events. What you need to do is identify the right investment and how much you are prepared to risk and you should come out fine.
Hrishi K: Santosh, we spoke about mutual funds and SIPs early on in the series. The market is touching new highs but a lot of people are cashing out their SIPs now. Is that the smart thing to do, your opinion please?
Santosh Nair: Well Hrishi, I have my own view on this. So ok, some people say that you just keep investing money month after month don’t look at it at all, but I would say that you are investing for good returns and as much as you invest and save you should also spend, some bit of it. I don’t think it is indeed a bad habit to be occasionally booking profits but if you are stopping your Systematic Investment Plan altogether then that is a problem and you are stopping it just because the market is falling and you feel that it is not the right place to be in, I think that is an error. Investors need to keep one thing in mind. Whenever they are booking profits they should have a purpose for that money that they taking out. Don’t let it stay idle. So if there is a purpose then I would say there is no harm in booking profit once in a while that purpose could be anything. It is that vacation that you always wanted to go, probably it is the car that you always wanted to own, and it could be anything. But if there is a purpose well no harm, but after you have booked profits I would say that still continue to stay at the path so in my view don’t panic, don’t stop your SIPs simply because the market is in down turn because over the longer term clearly thing average out.
Hrishi K: You are listening to National Stock Exchange (NSE) presents Invest – O- Cast (An exclusive investor podcast) Powered by MoneyControl we’re committed to break the limitations of geographical boundaries and reach investors across the country. With me is Santosh Nair, Editor for MoneyControl and we doing a quick recap of the series. Santosh, you are an author yourself. You must have been all ears on the ‘Kiran Telang’ episode. Kiran spoke about the books that make us smart investors. And that leads me to a logical question, what are your favorite books related to personal finance and related to investing?
Santosh Nair: Well yes indeed, Hrishi I did tune into that particular episode of Kiran Telang and I love books really and I love reading, but when it comes to personal finance and investing some of the books that I have enjoyed really don’t have a direct relation to investing but they do teach you some of the basic lessons. So there is this book called ‘Predictably Irrational’ by Daniel Ariely he is ex-Israeli service man, so he had suffered some injury and during the time that he is recuperating he kind of started delving into you know lot of questions very deeply, why do we decide like this, why is it we take certain decisions like this and why not this way. Why do we act in certain way? So it is conducted a series of interesting experiments. So there is a lot that I learnt from that book and as I said that it is not directly related to personal finance but the fundamental premise here is that you need to ask yourself some relevant questions. Before you take a decision, I’ll just will give you a random example, so for instance if let’s say there is a shirt that you plan to buy and you are getting 100 rupees off. It is a 1000 rupees shirt and you are getting 100 rupees off and let’s say few blocks down the line there is a sale at a footwear store where you get the pair of sneakers for 4000 rupees and you are getting 100 rupees off on that. Typically what you tend to do is 100 rupees on 1000 means 10% that is really nice discount I am getting, so it is worth the trouble. Why should I walk there when I am saving 100 rupees off on 4000 bucks but that is pretty miser which is barely 2-3% but the fact in both cases is that you are saving 100 rupees? So even you might look at it on a relative basis. And in absolute terms you are actually saving 100 rupees and in both case it is pretty much the same. Then I like Joel Greenblatt ‘The Little Book’ that still beats the markets, so in the book Greenblatt has advice investors to look at 2 parameters that is earning yield and return on capital. And he says that then combines these 2 factors and choose the stock. Also enjoyed Nassim Taleb “Fooled by Randomness” that book basically explains how luck, uncertainty, probability, human error, risk and decision making work together to influence your action. What that book says that you may do all the right steps but still it’s not a given that you know you will get the desired outcome.
Hrishi K: So you look at the combination of life lessons and finance?
Santosh Nair: Yes, Hrishi you have summarized pretty well.
Hrishi K: One of my favorite episodes was when we spoke about the role of women in investing today. We haven’t given them enough credit so far and there is no doubt about that and it’s time to change that. The insights that ‘Medha Raheja’ gave us opened up so many eyes. So you know the end of every podcast Santosh I do something known as ‘Wisdom in the bank’ segment, where I just recapped whatever is happened through this episode. What is your favorite Wisdom-in-the bank moment from that women investing special the one by Medha Raheja?
Santosh Nair: So a couple I will just dwell on the most important one, so something that I found very helpful is that ‘ ’Don’t keep any funds lying idle at home’, ‘don’t keep anything in cash’, cash basically it is a dead asset that’s what Medha Raheja said put everything in your bank account and sign out for the systematic investment plan or even a recurring deposits but the basic point of view she is trying to make is that don’t keep anything in cash, so that’s a very helpful tip. Because we sometimes tend to look down on something like Recurring Deposits, we used to do that many years back but now we think that you know it doesn’t give all that good returns, but the important thing is that it combines 2 things one it helps you maintain a certain discipline and then at a certain point when you actually are looking for some money, you will be very happy to know that over a period of time it has grown actually into a tidy little sum. So that was good take away and she also said that one should read up a lot about investments after all it is your money. And even if it is starting with small thing like an article in the newspaper you need to be aware of all the things related to finance happening around you, so these I think are some really good takeaways from that episode.
Hrishi K: You’ve been in this business for over 2 decades, 22 years, if I am not mistaken. You have observed the world of investing and have picked the brains of so many investment gurus while you are writing, while you are podcasting. How do you see the world of investing unfolding in India over the next 10 years? What are some tips that you would give our investors based on the Invest-O-Cast podcast as well as your personal experience?
Santosh Nair: So Hrishi as I see it there is already lot of awareness about the need to say, so partly this is also driven by societal trends, so earlier you had pretty steady jobs, people would be in a job for many years at a stretch that is not the case now. The good thing here is that you know people seem to be earning more, they are getting better salaries. Job security is less, so per force most people try to put money aside a little more particular. The second trend is that people also enjoy spending and indulging themselves so which means that they need to generate good returns on whatever they saved. So these 2 trends means that probably you will see better times for financial advisors because people are now very keen to save money, this awareness was not so much at least some years back and there are more instruments now available better vehicles for investing your money and getting a decent return. So the trend broadly is that, you will see increasingly more attention being paid to managing your finance well, is a pretty much good thing. I read an interesting tweet this morning and I would say that pretty much summarizes what investing is all about. So this tweet was that “Good investment skills are like driving” So when it comes to driving you know things that are important are like choosing the root, vehicle, knowing when to step on the actual accelerator, when to brake and take an alternate route. So similar skill set applies to investing as well. Basic knowledge is good enough in both cases and you just need to keep at it and you will definitely improve as an investor. Just follow the basics. So even as I mentioned earlier also, if you are disciplined and if you are patience, those 2 attributes in themselves are very good enough, the rest is all about experience you will come across many situations where sometimes you have done a lot of research and things haven’t played out really well. In some cases you just went, followed your gut instinct and then things played out really well. All these things will happen; those are experiences that you will collect over a period of time that will help you become a good investor. But the 2 things that I will keep stressing are discipline and patience just follow this and I think you will be able to grow your money pretty well.
Hrishi K: Santosh, it’s been an absolute pleasure having you on the show today and it’s also been a great ride with MoneyControl on this podcast. Actually I have learned a hell of a lot from these 24 podcasts that we have done together. My producers here have been awesome, brilliant bagging one top notch advisor after another. It’s been a blast! Thank you very much.
Santosh Nair: Thank you Hrishi.
And that is a wrap on our show NSE presents Invest-o-cast! I am your host Hrishi K for NSE Presents: Invest – O- Cast (An exclusive investor podcast) Powered by MoneyControl. To know more about our podcast, log on to moneycontrol.com and visit the podcast section. In case you would like us to address any of your investment queries on our show do write into us at: firstname.lastname@example.org. That’s email@example.com. You can also reach out to us on Twitter @moneycontrolcom , Twitter @moneycontrolcom or Facebook @moneycontrol.com, do remember to use #nseinvestocast, so it’s #nseinvestocast
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