‘High risk is necessary for high returns'

“Always build some investment goals for the medium and long term. But don't worry about getting them exactly right, as nobody ever does,” says Rajesh Sud, CEO and Managing Director, Max New York Life Insurance . Here's a sneak peek into how he manages his personal finance. Excerpts:

What are your top financial goals?

My overall financial goal is to build sufficient wealth and income to provide security and peace of mind to me and my family. Essentially, I should be able to sustain and improve my family's lifestyle, even if some unfortunate events happen along the way. I should be able to cater to the education of my children and offer them freedom to choose their careers. I should also own a house and have a carefree retirement, and pursue my interests without worrying about money.

How has your idea about money changed with time?

Money, when I started out in my career was a necessity, a prime motivator. Today, it enables me to make choices as per my preference. But while it continues to be important even now, it is not the prime motivator for my efforts.

Tell us about your most successful investment.

I have had some specific stock picks that have done phenomenally well. If I were to add a quantity dimension to it, it would be real estate. If I were to take a peace of mind view to it, it is my life insurance policy. At a spiritual level, I believe the best investment is in one's self - through knowledge, experience and building character.

One mistake in investing or saving that you regret?

When I made my first few stock investments, I fell for the ‘market tip' syndrome and lost some of the money that was my mother's. Also, I ended up over-extending myself in the market financially then. I have never had these two situations again after I learned this expensive lesson.

What has been your most important learning experience?

Something that is so well known and yet we see so many people fall prey to it – that, it is not possible to get higher return without higher risk and that greed for short-term returns is a sure shot recipe for disaster. Doubly so, if you are working on leverage.

Tell us about any books or investment guru that inspired you to think out of the box?

Rich Dad Poor Dad - on the values of saving, compounding and a commonsensical approach to money. Warren Buffet - for his philosophy of investing for the long run, betting on people and well run businesses and his philanthropy.

What's the amount of wealth you hope to retire with? How are you creating this corpus?

I have realised over time that this is a moving target and in the overall scheme of things, it is not relevant to peg yourself to one number. Systematic and regular savings to a pre-determined asset allocation plan and periodic reviews of goals and investments is how I hope to achieve my goals.

What's your message on savings and investing to young people just starting out on their career?

First, get familiar with the world of investments - types of instruments, risks, tax etc. Second, always build some goals - medium term and long term. But don't worry about getting them exactly right. Remember, nobody ever does. But having a goal will guide your thought and action. Third, work on the power of compounding and disciplined savings habit. Save not only through investments but also by reducing wasteful expenditure.

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