Stay clear of the EFGH factor (emotions, fear, greed and hoping against hope) in investing, advices Mr K.K. Mital, Head of PMS at Globe Capital Market. With a good 29 years of experience in the field of investing and finance, his approach to investing is simple – start early, make a plan, stick to it and always think long-term. Excerpts:

What are your top financial goals?

To sustain a comfortable living for my family. For that, I should have a sufficient sum for my post retirement life, which should be 24-25 times of my family's current expenditure excluding liabilities.

Tell us about your most successful investment…the one that made the most money for you?

The most successful investment in my life has been in real estate, made during 2002-04, and in certain stocks based on high dividend yields.

I had bought Tata Steel below Rs 100, LIC Housing Finance below Rs 50 and invested in public issues such as Ranbaxy, Grasim, Reliance and Infosys, all of which have multiplied manifold. I also invested in gold in small quantities regularly on festivals.

One mistake on investing or saving that you regret?

Making an early exit on certain good stocks.

How do you go about planning your investments – do you seek professional advice or do your own research?

In the early stages of my career, professional advice was not available. So, I invested by virtue of my own research and knowledge.

However, being a CA by profession helped as I had in-depth knowledge of economics, debt market and capital market.

What has been your most important learning experience so far?

The most important learning has been the principle of savings and investment, the power of compounding and of making financial goals. I have also learnt to avoid the ‘EFGH' factor in investing.

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

I have always been inspired by Warren Buffett and Benjamin Graham.

How do you plan your investments to beat inflation?

I firmly believe that the major tool to beat inflation is to maximise investments in the capital market. Real estate and gold is also a good investment avenue. These asset classes have a track record of giving more than 15 per cent return annually and should continue to do so over the next two decades also.

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

As mentioned earlier, I wish to have a sum that is at least 25 times my current annual expenditure. Towards this, my major investment is in real estate ( 45 per cent of my total portfolio). I have 35 per cent in equity, 10 per cent in gold and FD each. Also, my family and I are adequately insured against the unforeseen.

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

With the kind of comfortable income level these days, one should save early and invest it judiciously. The focus should be on wealth creation over a long period of time rather than to trade and speculate. Leverage should be avoided at all cost. Young people should invest major chunk of their portfolio in equity and/or equity mutual fund through SIP route for a longer period of time for creation of wealth. Apart from this, they should invest and save in EPF and PPF for their retirement corpus.

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