‘Investing on hunch has hurt me’

“All investments made with a long-term objective, without frequent monitoring or switching have worked well for me,” says Rishi Piparaiya, Director, Marketing and Bancassurance, Aviva Life Insurance. Here is his take on money and investments.

What do you look for when making an investment?

I try to keep my finances as simple as possible. I look for investments that do not require active monitoring such as insurance policies and mutual funds through Systematic Investment Plans (SIPs). I generally segregate my assets in three buckets – short-term, medium-term and long-term and the investment philosophy as well as risk appetite is different for each. For the long run, I generally like to invest in insurance plans as these are a systematic way to invest funds as well as get some protection cover. For the short- and medium-term, I look at risk and liquidity over returns.

How much do you set aside for investments?

I set aside about 30-40 per cent of disposable income towards medium and long term investments.

Do you rely on advisors?

I do consult financial planning advisors and experts to understand their views on the market. As required, I may research product features, media reports online. The final decisions, however, are taken by me.

What was your first investment? How did you zero in on it?

My first investment was equity shares of Colgate Palmolive. I was a college summer intern with the company and my project was to analyse and predict the stock performance on the basis of fundamental research. It was interesting and I believed in the company and the future. And consequently, at the end of the summer I went ahead and bought a hundred shares.

How do you plan investments to beat inflation?

Equities, held over the long run, by and large always manage to beat inflation.

A lot of my asset allocation is therefore skewed towards Unit Linked Insurance Plans and equity mutual funds.

How has your allocation across different asset classes changed over the years?

Risk appetite seems to be inversely proportional to the whiteness of hair. As a young professional, I was completely oriented towards equities and my investment portfolio had a high equity exposure.

Over the last few years, I find phrases like capital guarantee, principal protection etc creeping into my vocabulary. So there is some movement towards debt and principal protected structured products.

What has been your best and worst investment? Any lessons learnt?

All investments that I have made with a long-term objective, and which I have just left aside without frequent monitoring, re-allocating, and switching have done well for me. Conversely, whenever I have made investments based on a hunch, tip or intuition, more often than not I have burnt my fingers. The lesson is that consistency and following a set and systematic process works – in everything in life including investments.

What corpus are you comfortable retiring with? How are you building it?

I would be comfortable retiring with a corpus of great friends and family and a passion that keeps me occupied.

From a financial angle though, one can’t depend on a single financial instrument to save for retirement. One needs to start as early as possible and leverage the power of compounding. One’s plans need to take inflation into account. Needless to say, a self-owned home, however big or small, would be nice to have. A combination of insurance, pension plans, debt and equity mutual funds, as well some exposure to bullion are all safe bets to invest in as one plans for his or her next innings.

Vardhini.c@thehindu.co.in

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