Bryan: If we think of equity as a retirement corpus creator, should that
mean that we should only buy shares of big companies which I am sure would float till then?
Anand Shah, head (equities), Canara Robeco Asset Management Co Ltd. Ashesh Shah/Mint
Shah: Yes and no. A large part of one’s investment should be in large companies, but a small portion of one’s investment can also be in small- and medium-sized enterprises, which have the potential to become large companies. This is how we invest through our diversified equity fund, where 75% of the money is invested in large-caps and 20-25% money invested in potential large companies.
Lokesh: From a long-term perspective, where should one put his money—real estate or equities?
Shah: From the long-term perspective, equity offers superior returns and better liquidity vis-a-vis real estate. My vote is for equity markets, but do so in a disciplined manner through the systematic investment plan (SIP) route.
Ashish: Have the markets run up too much? Isn’t it a global wave of cheap money again. When the US raises interest rates, won’t this crash?
Also See | Canara Robecco MIP
Shah: Yes, cheap money globally has made assets expensive and Indian equity markets, though they have not reached extremely high valuations, but are not cheap any more. Thus, if interest rates start rising, it can have an adverse effect on the markets in the short term.
Emerson: What is your advice to young investors?
Shah: Most important, use equity for wealth creation and not income generation. Use equity to create a retirement corpus rather then generating income in the short term. One should start investing as early as possible. Starting a Rs5,000 SIP at the age of 25 is much better than starting a Rs10,000 SIP at the age of 35.