Investment is not about making money, it is about creating wealth, and investments in mutual funds lead to small amounts of wealth over a longer period of time, according to financial consultant Roopa Venkatkrishnan.
“Investment is a goal that you need to achieve. Mutual funds give returns above purchasing power to sustain yourself," she said on the sidelines of the Mint Mutual Fund Conclave.
India doesn’t have social security and in these days of high inflation, one needs to guard oneself against eventualities. So it’s necessary to ready a corpus.
According to Venkatkrishnan, investment is a discipline that one needs to achieve, and for that, one must keep a long-term horizon in mind. “We need to have a period of 10-15 years. People who start late have a problem of sustainability. Certain asset classes require time to yield returns. Equities, for example, are not for two to three years."
“Investment is actually about conviction. The returns are never sequential. For four years one may get zero return, but for the fifth year, the product may yield 100% return. Since the investment is spread over 10-15 years, the risks get mitigated.
Is there really need for the specialized kind of advice?
“Investment involves specialization. So one needs to seek that kind of specialized advice. Markets these days have become complex."
But what about her personal experience in creating wealth?
“I gradually created wealth over the years. My returns have compounded, clients’ returns have compounded. There haven’t been any big-bang returns. They have mostly been gradual."
Any sour point during the journey?
“During 1999-2000 at the time of the tech boom, I lost ₹35000 in a single day. That’s when I vowed never to do it again," the financial consultant added.