Do the due diligence before investing in a stock and talk to people who understand equities better, urges Vikaas Sachdeva, CEO, Edelweiss Asset Management, in a chat with BusinessLine.

When did you start investing?

I used to read a lot about finance and that was when I realised that I was passionate about equities. I started investing in equities through IPOs when I was 20 years old. I used to save all the money I earned by taking tuitions to do this. My first investment was in the IPO of Arvind Mills.

Investing in IPOs then was very similar to a lottery. Thousands of people used to apply and it used to take almost two months to even know if one has been allotted shares. My interest in equities increased only after I joined an investment bank.

What was your best investment?

The best and worst financial investment has been in equities. My investment in the stock of HDFC Bank has been my best investment, till date.

I bought the stock at ₹35. I held on to it for a considerable period of time and that has helped returns.

So, besides betting on strong fundamentals, staying invested for a longer period of time also helped me make the most of my equity investments.

I have also invested quite a bit in myself. I have kept myself healthy and stayed away from conventional vices, which have helped me manage work-related stress. My next biggest investment has been in books. I am a voracious reader and read a book every fortnight.

What is your current asset allocation?

I invest primarily in equities. About 70 per cent of my surplus is currently in equities and the balance 30 per cent is in real estate. For my children, I started investing in equity mutual funds from when they were young.

For my wife, I have invested in balanced and fixed income securities. I have not invested in gold.

What have you learnt from your mistakes?

I had invested in the stock of Pentamedia in the late 90s and this was on the advice of a close friend of mine who is an astute investor.

Thanks to the dotcom boom, the stock price jumped almost 100 times in less than a year — from ₹20 levels to around ₹2,000 levels. I booked profit in the stock and asked the same friend for advice on what to buy next. He advised that I buy more of the same stock as it had corrected quite a bit. And in three years, the stock fell to ₹2. This incident made me realise the importance of understanding the fundamentals while investing in equities.

What is your advice to investors?

It is important to do due diligence before investing in a stock. There is a lot of noise around; so talk to people who are older than you, who understand investing better. What works for you may not work for others, so discuss it with people. Be aware of what you are getting into before you invest.

Three things that one should keep in mind while investing in equities?

First, when you invest in equities, start in a small way and be comfortable with it. Second, be patient with equities. Third, sell only when you are in dire need of money.

When we buy insurance do we look at any time horizon? We want to keep it till the end of our life. So, why don’t we do that with equities too? If you have got into a good stock, you make money if you stay invested.

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