Kartik Jhaveri, Financial Planner speaks on first time investments, SIP's & market

Kartik Jhaveri, Financial Planner speaks on first time investments, SIP's & market



good evening and thanks for tuning in to Mira now welcome to another episode of investors guide where we help you understand all about saving investing and how to make your money work for you and of course you can get all your personal finance related questions directly answered by the experts so whatever your question send them in you can email your questions to us on investors guide mrn at gmail.com you can call us on zero two two two four double nine zero five four six or simply connect with us on Facebook or Twitter all the details flashing on your screens and let's quickly get to today's show joining me on the show is a cottage a very certified financial planner Karthik thanks so much for joining us on investors guide Karthik you know today's show I really of course we have a whole lot of questions but I really want to focus on in new investors on advice for first-time investors because we've been getting a lot of questions from investors with just the people who just started working people who I want to know more about financial planning how to start how to go about it and that's really the focus of all our questions today and the focus of our discussion as well so when you are starting out by the what's the first thing you would say to somebody who comes up and says that I have you know maybe 1000 2000 3000 rupees that I want to put in every month I don't know anything about investing how do I start so that's really true you know because I love to answer this kind of a question because people who are first I'm going to step onto that journey of starting to make their millions and anyway they're already so exposed to everything around the world so they know what a million is they know what a billion is they know what a billion dollar is what a billionaire is they know all of it so there is just three things I want to tell you to all the young people who are listening onto this show and also for the others who are listening to the show who want to start their journey and if you haven't done it so far maybe this is the time so so one is go maximum so what that means is every 10,000 that you can deploy and see you've got traditionally three areas of investment one is fixed income the other is equity markets and third is real estate so fixed income obviously is very conservative in a moment equity markets the place that you can go because even if you have a thousand rupees you can take advantage of that it's the best creator of wealth for the last 30 years and the third is real estate so go maximum every time you think about a 10,000 that you can deploy it is almost translating to something like 2 crores at about 20 years time think about it if you are 25 by the time you're 45 and if you have to cross behind you think about how many options you have at that point of time in life and this is just with a mere 10,000 do the mathematics whether you can do 20,000 or if you can do 2,000 whichever way it is so what maximum try and do as much as you can to do not be aggressive I'm sorry do not be conservative be super aggressive go to the equity market don't go PPF don't need to do Provident funds don't need to do figs deposits just go aggressive and it was smart if you want five things in life make five separate buckets put a little bit of money into each bucket and start an investment plan for each little bucket that you have and for whatever you want to do absolutely in fact let's Li take the first query here coming in from Rishikesh asset car who's 22 years old says I'm an engineer working an IT firm I have started investing in mutual funds a 5,000 rupees per month as si P in the following funds access multi cap fund l NT mid-cap fund ICS here pramatta cap fund do i need to make any changes I want to invest another five thousand rupees per month which mutual funds should I invest in and is it too early for me to invest directly in the share market well a copic again a young investor here has a couple of funds in hand we will keep the share market question for a little later because that's again the couple of questions that have come in about you know youngsters wanting to start investing in the stock market which perhaps may not be the right thing to do but we get to that in a bit first your advice for deshee so the funds that he has they are fine there is no problem and when you're starting off your investment journey multi-cap is a great idea to go with because what happens in a multi cap fund you have a few large blue chips you've got a few mid caps which have the potential to become large blue chips in future and you have a few small caps as well so the fund manager is quite nicely distributing your money across various categories of the stock market investment universe so which is my great idea now you're already doing three funds it's enough dough for you to just double it into the same three funds because even if you had five crores of investment I would still say invest in about four to five firms every fund please understand has got 30 to 40 different stocks inside it and then when you have five of them you're going to have five and to say 40 stocks each 200 stocks even if you remove 50% your duplication you still with hundred stocks and that's quite a large portfolio to have so do not try and have a multiple number of funds in your portfolio because over time it'll get very very difficult administratively to handle capital gains and all of that stays simple you have three funds going all three are great no change required double your investment what are you doing whatever you are doing in this just double it on that all right well you hope that answers your question and we'll answer your question about the stock market as well in just a little bit from now but Karthik you know coming back to the kind of advice that one gives a young investor when somebody says that you know they've started working they want to invest a few thousand rupees a month how important are the other aspects of insuring their insurance is in place ensuring that a contingency fund is in place how much weight would you give all that at this stage so much so weighted of D that you till the time you don't get all that out of the way you should not even start on to investing one rupee of your money so like you said contingency fund now you look at your situation and your job scenario and the skills that you are required maybe you think you can get another job in three months time or maybe it's gonna take you six months time or even a year for the kind of skills you have in the level with which you are to get a new job so the amount of time that you think you're going to be out of a job those many months of expenditure so if you for example spending twenty thousand a month and if you think you need six months to get a good job so twenty thousand into six is one like twenty thousand should be a contingency fund should be sitting in some fixed deposit or a liquid fund for you a second your health insurance no matter what your health insurance has to be in order because think about it if you get out of a job you are in between jobs if you have hospitalization you or your family members your spouse your children that could wipe out literally everything that you've got before you so health insurance number two and number three life insurer still the time we do not have these three things in place do not even start with one rupee of your investment into the stock market or fixed income market or even a fixed deposit you have to get these three basics in order first and then you start your investment journey right so so you know is assuming that it's so you would advise in that case that say the first few months of your you know the amount that you can save in the first few months goes towards your insurance and goes towards your contingency fund and then you start putting in that extra money into a mutual fund perhaps yes perhaps you know so even if you did do a contingency fund let's say you're living with your parents I mean you don't need to worry so much I mean you know don't go mental over the whole idea I mean you know start your journey but while you do that health insurance number one priority I mean even if you for example did not do contingency did not do life insurance out of the three to my mind the most important is health insurance because if you've got your health you are capable to earn whatever money you want whenever but if something happens to health and if you're hospitalized or disabled or anything of that order then you know that's a serious trouble so yes get your help and it's not too expensive you see I mean if you had a ten like kind of a policy for the rest of your family if you are say of early 20s or 30s your premiums going to be like ten fifteen thousand it's not so much and you have the option of doing half your leaves and things are mostly it is annual but it's difficult to find a half family product but you know just just do that once and you only pay that once in a year and get it out of the way and then start your journey then then maybe you start your investments and if you don't want to start your life insurance okay suspend it for a year or so but definitely do it before you take any loans right and one more point of clarification Karthik in case you already have you know a Medicare policy from the company that you're working for how important is it to have a separate one where you're not dependent on your employer so in today's day and age my experience is that everybody who's under the age of 30 wants to change their jobs literally every year I mean I I'm making a little sweeping generalization of sorts here but if you fall into that space then you need to have your private health insurance because you see you will get companies medical benefits so long as you're an employee of that company you move to another company you move into a smaller company which may not have that facility getting a better pair you are still going to move and then you're gonna ignore the fact that you don't have the health insurance cover so judgment dis whole thing yourself if you are working with a large MNC firm or a large banner then you will have a great program if you intend to stay in that company for the next five years okay you can be a little bit relaxed about the whole thing but if you are going to be in a situation where people change jobs very often but the slightest of you know trouble at workplace the slightest of ego issues or slightest of human dynamics playing out if you are amongst those people who will who think that you will change the job by all means you should have your personal health insurance because you're putting your family at stake while you are already putting your career at stake on one side absolutely all right on that note let's get to the next few questions and we're going to club the next two or three questions because they're all more or less from very young investors who just started off and they all want to start investing at this point so we've got a question from web haboos 23 says I've just started working eight months ago I want to invest one thousand to two thousand rupees every month in mutual funds which schemes can I invest in and the another question comes from Annika Donghae who's 20 who says I would like to invest a 1000 per month for the next ten years how should I invest I have no knowledge about investments and we've also got a query from Mandy Sanaa who says I want to invest 2000 per month for five years where should I invest my money so I can take all of them young investors perhaps who just started working they probably you know have enough 1,000 to 2,000 rupees to spare a month or which they want to start investing and it's really heartening to know that at the age of 20 21 22 they there are people who are looking and who have the focus and the maturity to say that this is important and I need to start doing this now but what's your advice for them so this is obviously very very encouraging and if you guys start investing journey right till the time you're by the time you're 20 22 or 25 think about it a thousand rupee that you invest and you keep doing that for the next large part of your working career by the age of 50 which is about 30 years down the line your 1000 will be a sigh he will equal to 70 lakhs think about it you see so let me give you the mathematics first I did a little bit of you know quick numbers so a thousand rupees si P if you continue doing that for say five years you'll accumulate one lakh rupees you do it for ten like for ten years you accumulate about three lakhs you do it for another say twenty years you will end up with fifteen lakhs of corpus continue doing it for thirty years and an astounding 70 lakhs from one thousand rupee si P so do not think that one thousand is a small amount you can do a hell of a lot a great amount of wealth creation can happen just by mere thousand rupees but start the journey right having said that the best way to start journey is a mutual fund because like all of you have been asking if you don't have knowledge about where to invest how to go about doing things you know you earn money you know you spend money so every month later nice good EMI so called EMI which is called an SI P let it go out of your bank account direct debit and go and buy a multi cap fund a multi cap fund is a beautiful idea because it gives you the best of all the worlds when you are starting off you want to have a little bit of money in ABC but instead of having separate investment products running one product takes care of it for you and that's why multi cap fund is a pretty good idea to my mind start your scipy they continue it make a systematic you know investment every month but remember one thing do not stop it the stock market does not go in a linear fashion it just does not go up like a rocket so it goes up and down but stay with it you'll end up with a huge huge packet at the end of 20 25 30 years absolutely I think I want to you know just take a moment here and those numbers that you talked about you know that really explains to investors the power of compounding because that is something that is so important and it's extremely important to understand where it can really get you so if we can just get those graphics up on our screen sir for our viewers you know in five years 1000 rupees every month at a fifteen percent assuming you're getting 15 percent returns on that 1000 rupees in five years that will be one lakh in ten years that will become three lakhs in 15 years 15 lakhs and in 30 years 70 lakhs those are the numbers that's as much as you can mu accumulate with only 1000 rupees a month for an extended period of time so just imagine what can be accumulated if increase that 1,000 rupees obviously as you grow your income is going to increase so obviously you can start putting in more money so the power of compounding really kicks in as you grow as you keep increasing the amount of money you set aside Karthik absolutely so therefore don't think that you know I need to have 20 legs to start my investment journey a thousand rupees enough in today's world you can even do 500 rupee NSIP you can even start with as low as that much I mean if you are in the hinterlands as much as you and under rupees so don't think that thousand is too little but start it because if you don't start it and you keep waiting to start with that you know figure of 20 likes maybe you lose about 20 years of your life and you'll realize you don't even have 20 likes behind you but your thousand rupees itself will become like you know moon moon say Sagar berta it's going to be something like that so small small drops of your investment will make a huge ocean for yourself all right then we've got a question from a vehicle chicken who's again 20 says I earn 20 thousand rupees per month both my parents are working and financially secure how much should I invest and well well okay Acharya he's quite lucky he doesn't have to worry about his parents and has a good chunk or two sort of perhaps put in and this is the age where he can probably put in I mean without taking away from the enjoyment of having financial independence and starting to earn but you can put away a good chunk of your money absolutely when when I started off my career many many years ago my salary was about it now a thousand and from that I used to do a four and a half thousand si P so you know the answer to your question this here is invest hundred percent if you have no other liability no other expenses do hundred percent but but as a as a general rule for everybody who's in that space who's starting out does not have so much of responsibility their parents to take care of you you're pretty comfortable you know try and put away at least forty fifty percent of your money I'm assuming that you'll need some money for personal expenditure have fun you know take an EMI if you want to buy an ik iPhone if you feel like doing that and so on and so forth so don't compromise but at the same time don't sort of overspend where you are actually you know spending future earnings so whatever you have go ahead enjoy your life but try and do at least forty percent if you do forty percent you know you land up in a very very sweet spot in about ten years time and all your friends will be complete off what you've created in just ten years time right and a Karthik you know that's the other point I mean when one starts earning you you tend to feel you know obviously financial independence you want to buy things and do things but at the same time you need to deal with that in a sort of a very balanced way and ensure that you don't overdo it and you don't sort of find yourself out of money at the end of every month how do you ensure that you're not overspending that you don't find yourself at the at the end of the month without any money looking you know at hoping for next paycheck soon so that's a very very pertinent situation of me so what happens here is you know often when we spend we don't realize that we need to save something we need to invest something so people tend to spend and then they feel that you know mean my expenditures get over when my am eyes get or I'll start the journey of investment but it has to happen from day one because only then can you manage all the loans is actually ironical so therefore maybe I'll give you a little bit of a rule of thumb a guideline of sorts if you like so out of your money minimum twenty percent has to get saved no matter what which means you've got eighty percent to do whatever you want now out of the eighty percent money that you will have the maximum you are allowed is fifty percent for EMI now if you want more oh let's say especially for a house or for other luxuries or whatever you want car loan you know bike loan or a phone loan or anything that you do all your EMI should not be exceeding 50 percent of your income because then the remaining 30 percent is for your personal expenditure so if you sort of break up your 100 rupees into you know 20 30 and 50 so 20 rupees number one priority put NSIP invested if you don't like the stock market no problem go to the fixed deposit new or recurring deposit but put away 20 percent of your money very very important the remaining 30 percent is for expenditure remaining 50 percent for EMI and if the lesser EMI is you have you have some space in that EMI is 50 percent chalk then go ahead and start another investment out of it because those things will help you to buy bigger things later on if it's a one-bedroom you might be able to buy two if it's a midsize car you will be able to buy a luxury car all these things will happen but the question is that you start putting away the stone be percent first right and Catholic of course that's the other thing that the importance of holding on to what you've invested in for a long period of time and not sort of at the first you know want of you wanting something else or something to indulgence something just removing all your money removing your investments that's something again that needs to be ensured that you don't end up doing that and you keep your investments on for the long term until and unless there's an actual emergency absolutely we've all learned this in school right as children we learned rolling stone gathers no moss so if you invest your money take it out investor take it out you know one where anywhere whether it is you who's twenty or thirty or years old or whether there is somebody who is 50 or 50 fires or there are enough people who keep investing keep removing keep investing he brewing and in between their investment and removal cycle which is as short as maybe six months they expect some magic to happen you know this kind of people will never ever make anything so you know when we say long-term it's more a disciplinary thing not really so much you know in terms of this is the rule of investment yes investments will take time to mature the whole idea is even if it's a fixed deposit now there's no stock market volatility and a fixed deposit but if you make a fixed deposit take it out in six months time you don't want to really own anything so if you want to earn a larger interest if you want your money to make money then the idea is you gotta let it grow and it's a sense it's a behavior it's a discipline that you need to have so therefore whether it's the fixed deposit or whether is the stock market in both the cases once you invest it you need to have that you know basic investment behavior of not touching it for some time so therefore don't even go overboard and try and be too greedy and invest everything but make a plan invest what you can do and like I said a while ago 20% should be bare minimum if you can do at least 20 then that's good to start with and then as zero your income goes up over the years try and reach a much higher figure because as income moves up your expenditure does not move up in the same linear fashion there is a larger gap so if your income went up 50% your expenditure might go up maybe 20% don't try and you know make it 50% even if you try it may not happen so you'll have some surplus you'll have extra surplus so go ahead and make some investments alright we got a question from Monty jongen who's 28 to invest for one year which investment option is better fixed deposit or mutual funds I think it's a short-term investment horizon so assuming he's talking about debt mutual funds so between a fixed deposit and index mutual fund what would be your advice so at the moment go to a fixed deposit I would think because if you know your timeframe very very clear that in nine months time or twelve months time I'm definitely gonna withdraw didn't make a fixed deposit if you are kind of a little unsure about the time of your withdrawal then go to a debt mutual fund which is a liquid fund or a short term mutual fund the reason for that is in a fixed deposit you'll get charged or the Exeter or early exit sort of a penalty charge and that would reduce your interest rate but in a mutual fund that won't be applicable so therefore if you are not sure exactly on the date and time of your withdrawal of funds and short term liquid funds and if you are pretty sure that you're not want to touch it for six months or nine months or twelve months then do a fixed deposit all right we've got a question from Govind Raj who says how should I go about beginning my investment planning well ago in this entire episode perhaps there has been answering all of your questions but Karthik you know specifically if you had some you know in a nutshell if you have to tell somebody how to start what would you say firstly don't listen to friends and philosophers basically look at these kind of shows where you get unbiased advice on how to go about investing second point is don't get greedy so if somebody says this is a fantastic investment maybe it is and maybe you want to believe him completely and maybe you do trust him completely but still don't get greedy and put all your money on that one day you know break your money into smaller parts and take your time to invest that money you can keep the money in the savings account and you know keep investing every month every week whichever way you like if you are working with a financial advisor maybe they'll make a plan for you so your hundred rupees will get deployed into maybe stock market fixed deposits over a small period of time but whenever you invest break it up don't do everything on one one stroke don't put all your money into one category whether it is a fixed deposit or whether it's an equity spread it out all right well we've got a caller on the phone line mrs. the falero who's calling us from mumbai thank you so much for calling us go ahead what is your question for Karthik actually I just have 12 grandchildren I want to win I want them to invest in them I mean the ball started working I want them to invest right so I I myself don't know much but listening to your talk now I thought of investing at teaching them to English so I just wanted to have a guideline even 1000 or 2000 into FIP yes now as IP I didn't get the full meaning of s IP and how where do I put that where business s IP available right well mrs. Valero s IP simply means systematic investment plan and it's a way to invest your money in mutual funds essentially so you know the best idea I would suggest for yourself and your grandchildren is to you know maybe watch this kind of a show approach a financial planner someday like Karthik who's there to help out and give advice on how to start investing and that would probably help but classic anything you would like to add for mrs. Valero yes so you know a lot of times everyone is quite comfortable and used to the idea of a recurring deposit you know because we've been doing that for for decades you know if not like a century because banking has been around for a long time so just the way every month you are putting in some money into the bank deposit in the same fashion when you make a monthly investment into a mutual fund and mutual fund has given you a convenience concept called si P so which means if you did not have a situation where you had lump sum money and you wanted to invest in parts you tell a company that I'm choosing this particular fund this scheme and I'm going to invest in small installments of 2,000 every month on a regular date so every month on a regular date from your bank account the money gets debited and your si P account gets credited and therefore you will buy subunits and that's how over a period of time slowly slowly you're buying a little by little brick by brick you're buying the piece of the stock market and as the shares of that particular fund grow in value the anyway of your mutual fund will also grow so like Romney said you can approach a financial consultant you can approach your bank there are lots of people who can help you do that you can even do it directly there are lots of mutual funds there almost forty companies registered in India a lot of them are doing great all the household names are in this business whether it's HDFC or whether it's Tatas or reliance or you know bin la etcetera so you've got all of them you can even if your grandchildren are comfortable doing online you can even go to the website of these companies and initiate it online it's really simple a couple of buttons and you could be done or you could simply approach an advisor and he could do it manually or electronically whichever way you want right all right mrs. Valero hope that answers your question and the do right back to us or call us again if you have any further questions on that and Karthik we've got time for a one quick question perhaps Oh probably a last word because we've got this other question from veeramani who says I want to invest in the stock market how do I approach the market and how can I get started as a beginner a quick word on you know youngsters investing directly in the stock market perhaps not something that should be advised at this stage so very quickly I'll also answer your question on me when you invest in the stock market you have to know about what you're investing so you need to do a little bit of research about balance sheet profit laws you know your about the company do some study do some research understand where you are doing but let's say you don't want to do any of that okay then there are two things that you must do one you should not listen to any tips from anywhere no matter what it is and number two you should buy a basic large cap company large cap means a blue chip kind of a company maybe you know products that you're using every day around you just sit there from the morning to evening think about the products that you're using for like last 20 years you know things that you're using to brush your teeth things that you're using to paint your house things that you're using to wear clothes I mean these are companies that have been around for a very very long time so by blue chips if you have to do it yourself by one shape by two shares if you really want to do that and if you want to go smarter and go deeper then start understanding and learning balance sheets read profit and loss company that makes profit will make a lot of profit for you if you buy the shares of that company or you could simply invest in that no traffic thank you so much for joining us with answering all of those questions and all of that advice that's on this edition of investors guide but do keep writing to us no matter how simple or how complicated your question is we sure to get it answered right here on investor bail until next week thanks for watching

Leave a Reply

Your email address will not be published. Required fields are marked *