Indian markets have been hammered by tepid earnings, lingering credit crisis and a consumption slowdown. Kalpen Parekh a veteran in the mutual fund industry, says a long lasting principle of good investing is to invest when there is mistrust. "Volatility is inherent. We should acknowledge it and be prepared to brace it," said the president of DSP Investment Managers, on the sidelines of Mint Mutual Fund conclave, which was held in Mumbai on 26 July. Excerpts:
Market is in a bad shape, What should investors do?
A long lasting principle of good investing is to invest when there is mistrust. When you invest, lower prices mean more units. We all like discounts and value adding. The markets have been sliding down in past one to two years and real long-term investors have been looking at it in terms of opportunity. They continue and stick to their path of investing. Investors should avoid doing right now is playing with his assets.
What is the difference between Active vs Passive Investing?
In my opinion, Active vs Passive investing is irrelevant. The single minded goal should be how to beat the inflation. Both are investments, whether active or passive.
Watch video: ‘Invest when there is mistrust in markets’: Kalpen Parekh's money mantra
How are investors reacting to subdued market right now?
There is nervousness. When NAVs come down, it creates anxieties. Investing is always about a balance of risks and rewards. Without risks, rewards won't come. Volatility is inherent. We should acknowledge it and be prepared to brace it.
Advice to first time investors
For those consumers, who are initially not ready to risk, liquid funds or money market funds or overnight funds are good options to venture into the field of investing in money. The biggest risk is not investing, money is important.
Three money mantras for investors
1) Start early: Give lot of time to your money, you will see the magic of compounding.
2) Last long through asset allocation
3) Have a good advisor