A slowdown can be a good time to invest

During turbulent times, it can be difficult to convince investors to invest. But the opportunity to invest in the market is high during such periods, said speakers during a discussion on “financial planning during turbulent times”.

Organised by The Hindu BusinessLine, in association with Aditya Birla Sun Life Mutual Fund (ABSLMF) in Coimbatore on Friday, this Surge Conclave was the second in the series, leading to a discussion on wealth creation.

“Market is dynamic; you can’t time the market or predict things. Unfortunately, we spend a lot of time on predicting, watching the price and buying with an eye on the future,” said K Annamalai, Managing Director, Annamalai Capital Franchisee — Karvy Consultants.

KS Rao, Head – Investor Education & Distribution Development, cautioned that past performance and recency bias may not help in wealth creation. He stressed that asset allocation is the key and it is a proven fact that 90% of returns come from asset allocation. He also emphasised that equity should always outweigh other instruments and a goal-based investment approach is important.

Need for a financial advisor

While this seemed a piece of good advice, Sheilendra Bhansali, Partner, Kumbhat & Co, Chartered Accountants stressed the need for having a financial advisor for the management and planning of finances.

“Most of us think we know everything, but an advisor is trained on the subject; he can bounce off ideas and offer suggestions without emotional bias.”

While conceding that it would be difficult to predict when the market would bounce back, Bhansali said “you can never bite the bottom. This is an accumulation phase for investors, but it should be done systematically.”

At this juncture, K Ramakrishnan, Head (Mutual Funds), Coimbatore Capital and President, Financial Associates, Coimbatore Team underscored the need for a periodic review of investments. “Stay invested; look at asset allocation and then depending on the need and allocation, choose your option. Be vigilant.”

Annamalai emphasised the importance of creating an asset that can beat inflation. “Managing a fund is different and so is the creation of the assets.

The discussions were moderated by C Parvatha Vardhini, Senior Assistant Editor, The Hindu BusinessLine.