The Hindu Business Line : Money Talk

Mr Anil Chopra is CEO and Director of Bajaj Capital, a leading financial intermediary engaged in offering financial planning services and distributing mutual fund, insurance and other financial products. Since his joining the firm in 1984, Mr Chopra has been instrumental in bringing international HR practices to the company and expanding its branch network to the present 120 from the earlier six.

Mr Chopra is an active writer and speaker on Investment Strategy and Financial Planning. .

When did you start investing and what led you to do so?

I started investing at the age of 22, soon after I qualified as a chartered accountant. I always cherished the idea of saving for the future. Besides joy, it gave me mental satisfaction and self-confidence to see my savings grow. What role do investments such as mutual funds and insurance have in your overall plan?

Mutual funds constitute my core portfolio, where the objective is to earn healthy returns and build a corpus for my retirement. I have taken some insurance policies where my first objective is to provide adequate risk cover to my family. The second objective is to have lumpsum amount from these policies to realise certain goals.

Some experts believe that young investors can afford a 70-80 per cent exposure to equity. Do you share that view?

How much equity exposure has to be maintained should be decided on the basis of the objective of investment, time horizon and risk appetite. So, if a young investor is looking to invest for the long term and has enough liquidity for his near-term goals, then his equity exposure could go up to 70-80 per cent. But, generally, it is observed that young investors have immediate goals such as house purchase, car purchase, etc. and their earnings is under pressure to achieve all these goals, so they redeem their investments early. So, in general, equity exposure in the young investor's portfolio should not be kept more than 60 per cent.

What is your advice to investors who have missed out on the entire equity rally of the past five years? Can they start now?

Equity in the past has proved to be the best asset class in terms of returns. If somebody is holding equity for longer periods, he would certainly be benefited with good returns. Research shows that the the probability of losing money in the equity market is almost zero with 12 years of time horizon. If you take any 12 years in the equity market and analyse the BSE Sensex returns, the minimum return would be 2.15 per cent (annualised) and maximum return 33.94 per cent (annualised). The average returns for the 12-year period remains at 18 per cent (annualised). So, it is not timing but the time in the market that is important.

Finally, your advice on three things that budding youngsters should/should not do when they start off.

My first advice to young investors would be to think long term because these days everybody is looking for quick money. And, in the process, the probability of losing money is also high. Be patient and give time for your investments to grow. And to start with the equity market, take the SIP route only. Second, take informed decisions.. Third, your equity and debt allocation should be based on goals and risk appetite. You should never be over-exposed to equity or under-invested in it.

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