To shed light on these critical issues, CNBC-TV18 interviewed two financial experts – DP Singh, Deputy Managing Director and Joint CEO, SBI Mutual Fund, and Feroze Azeez, Deputy CEO, Anand Rathi Wealth Limited.
Feroze Azeez highlighted the crucial role that asset allocation plays in determining investment outcomes. “When it comes to investments, asset allocation is very important because it determines 90% of where your money goes,” Azeez said.
He noted that as life expectancy increases (male life expectancy in India has increased by 25 years since independence), investors need to plan for a longer retirement period, which requires prudent investment strategies to ensure that the lifestyle can be maintained in the future.
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Azeez also cautioned against following the latest investment fads. “It is very important that you do not get carried away by trendy funds,” he said, stressing the importance of investing with discipline rather than trying to outsmart the market.
“To make money, you’ll have to make hundreds of right decisions… To create wealth, you’ll have to discipline them. You can be the most disciplined person and create wealth.”
DP Singh highlighted the dynamic nature of risk appetite, noting that it varies depending on an individual’s financial goals and timeframe. “Risk appetite is not static, it is dynamic,” Singh explained.
He illustrated this with an example: if a parent invests in the education of a child and the child is very young, the investment horizon is long and risk tolerance may be higher. On the contrary, risk tolerance should be lower if the child is approaching university age due to the shorter investment horizon.
To watch the full discussion, please see the attached video.
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