Many free investment advisors (finfluencers) today will tell you where to invest. However, with so much knowledge and suggestions, your investment profile risks are getting ‘cluttered’, says Swarup Anand Mohanty, vice chairman and CEO of Mirae Asset Investment Managers (India), during a session at Outlook Money’s 40 After 40 Retirement Expo on Saturday.  “There’s a lot of data around us today, but I wonder how we touch through such data,” Mohanty asks the gathering of industry leaders and various other stakeholders.

Investment Landscape: What Does it Have to Offer Today?

Mohanty states that the industry has grown tremendously, and the nation today is divided into areas, i.e. Pre and post-Covid. “Before Covid, the world of investments was one way, but now you have to look at it with a different purpose.”

Talking about investor growth, Mohanty states that the industry has grown from around 38 lakh crores to some Rs 67 lakh crore (investors) since when he started his career. “This is a dramatic shift because what is unfolding is a distinct shift from what used to be traditional investing to now finally financial investing,” he says.

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Earlier money in the industry used to come mainly from institutions and corporations. “However, today 63-64 per cent of that money that is there in front of you is coming from individual investors,” Mohanty adds.

People Are Getting Investment Savvy!

The investment landscape offers an overwhelming amount of information and options, particularly from a mutual fund perspective. Today, money is moving from traditional avenues to investment-savvy avenues.

According to Mohanty, investors’ views of fixed assets, such as the traditional fixed assets of fixed-income savings accounts, are beginning to change. The industry, on the other hand, is giving the investor class more options to cater to their needs.

Who’s behind this change? The Young, of course!

The young are taking to financial advising or investing from a very different perspective, Mohanty notes, quoting the data showing that equity investment has grown from 7 per cent to 12 per cent and 5 per cent to 11 per cent in the last ten years. 

The Industry’s Offering Basket

The investment landscape is vast. For instance, if you look at equity funds, your options range from small-cap, mid-cap, large-cap, and flexicap funds to others like thematic, ELSS, focus, and value funds.

Total Equity Funds: 499

In debt funds, you have options such as short-term (Overnight Fund, Liquid Fund, Ultra Short Duration Fund, Money Market Fund, and Low Duration Fund) and long-term (Short Duration Fund, Banking & PSU Debt Fund, Dynamic Bond Fund, Corporate Bond Fund, Debt Index Funds).

Total Debt Funds: 444

Hybrid Funds, which combine Multiple Asset Classes, offer options such as Equity Savings Funds, Balanced Advantage Funds, Arbitrage Funds, Aggressive Hybrid Equity Funds, and Multi-Asset Allocation Funds.

Total Hybrid Funds: 165

Passive Funds, such as Exchange Traded Funds, Index Funds, Domestic Funds of Funds, International Funds 

Total Passive Funds: 509

However, with so many fruits in the basket, one wonders which is ‘best’ for them.

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Cutting the Clutter: What Do We Do? 

“With over 1,500 options, you would first be confused about which scheme is best. Then you would worry about the returns or forget the risk associated with certain funds,” Mohanty states.

However, the focus has to be centred on what is most important. This begins with understanding that you should first and foremost start investing. The best scheme is the one that fits your financial goals, and the longer you stay invested, the better the chances of returns. 

“The power of 10 to 12 per cent of return compounded over 15-16 years is highly underestimated,” Mohanty says. While we focus on ‘return’, the game is all about ‘time’, which actually gives you the return.

What is most important: Goal!

“Most of us invest with a thought in mind to earn maximum returns, which often leads to investment mistakes like trying to time the market,” Mohanty states. However, one should focus more on setting financial goals before investing.

Why is goal-based Investing important?

Typically, the target of investment is to generate wealth that can sustain you in the long term, mostly during retirement. Key things you should keep in mind:

1. Specific goal achievement is possible only with recurring deposits in the same investment vehicle.

2. It helps select the appropriate asset class and investment vehicle 

3. Portfolio can be diversified appropriately across various time frames, investment options, and asset class 

4. Achieving goals in the desired time frame gives freedom to achieve other goals  

7 Steps to start investing for your goals 

1. List your Financial Goal

2. Classify your goals as per the time horizon

3. Quantify the future value of the goal and present financial capability

4. Get a risk profiling done

5. Allocate and create a goal-specific portfolio

6. Monitor the investments periodically

7. Periodic Portfolio Review & Rebalancing

Mohanty concludes his session with advice that it is most important for women to start investing and saving for retirement. “You will live longer than men. Money-making is more important to you than it is to them. I believe retirement and women investing are the two biggest ticking bombs of the country,” he says.