Among the things that clicked well with the listeners was the idea that fund houses will aim at catching investors very young – right after they are born! Parents, it was argued, will start filling up SIP application forms along with discharge papers for their babies at hospitals.

Not a bad concept, we thought, before we ventured to toss that crucial question at you: Are parents actually encouraging their kids to invest in funds or, in the Indian scheme of things, are they taking up investment programmes on behalf of the youngsters?

The answer is clearly a No. Indians are doing no such thing, not actively, that is. Except a set of intelligent, right thinking people, no one seems to be interested in the subject. However, as you will no doubt agree, starting to invest early has its points, howsoever strenuous that may sound.

You may be tempted to ask whether younger people should necessarily opt for the so-called children’s schemes that some fund houses offer. Not really, if you know how to redeem decisively when your child arrives at a critical juncture of his or her life. So, the trick may yet centre on the selection of a normal diversified fund, staying with it for a long stint, and booking profits when you need the money.

Investment programmes run on behalf of minors may well be kept simple. In other words, let’s do nothing that is too exotic (such as buying a fund with a very unusual mandate) or let’s commit to nothing that is too trendy. What is the point is working out your very first SIP in, say, an FMCG fund? Shouldn’t you rather go in for a plain-vanilla broad-based equity product instead, one with a good track record in terms of returns?

An early bird, like everybody else dabbling in funds, needs to remember that there will still be large risks to contend with. The fund that you selected so carefully may fritter away its reputation, courtesy a fund manager who loses his touch. Believe us, such a thing has happened plenty of times before.

Also, a young investor should know how to stay with winners longer and dispense with losers sooner. Many of us often sell the performers too early. That is clearly a blunder – something as deadly as the mistake of holding on to non-performers for far too long.

Feedback may be sent to nilanjan@thehindu.co.in

More Stories on : Mutual Funds | Events | Mutual Confidence

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page