look news india
Whenever there is a sudden big fall in the stock market or the market trades in the red, new and inexperienced investors start panicking. Most people get nervous and take wrong decisions after seeing red color in their portfolio. However, Radhika Gupta, Managing Director (MD) and CEO of Edelweiss Mutual Fund, believes that if your investment method and structure is right, then no matter how big the market falls, you can sleep peacefully at night.
Don’t fall into the trap of choosing stocks, understand the framework. In the book ‘The Alpha Bets’ published by Groww, Radhika Gupta has given very practical advice to new and young investors. He said that in today’s era, most families and young professionals do not have time to track the ups and downs of the stock market every day, check the balance sheets of companies or analyze annual reports. In such a situation, the real decision for new investors should not be which multibagger stock to buy, but which financial structure they choose which gives them the opportunity to participate in the growth without any mental stress.
Leave market decisions to professional fund managers According to Radhika Gupta, mutual funds provide a permanent solution to this biggest problem of new investors. In mutual funds, money is invested in shares of different sectors and market caps (large, mid and small cap). The most important thing is that the daily decision to buy or sell shares is not yours, but that of a professional fund manager. These fund managers take decisions based on strict rules and research. As young investors are busy building their careers and developing their skills, it makes the most sense to leave this emotional and heavy burden of monitoring the market to experienced fund managers.
Radhika Gupta’s simple advice for new investors Advising to stay away from tempting tips on ‘Multibagger Stocks’ found on social media, Radhika Gupta has suggested two best ways for new investors:
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Diversified Actively Managed Equity Fund: In this, experienced fund managers select the best shares according to the market trend.
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Broad-Based Index Fund: This is the safest way to directly benefit from the average growth of the market at low expense.
Radhika Gupta emphasizes that the initial objective of investing should not be to earn the highest returns in the first year, but to stay in the market long enough to reap the benefits of the true power of compounding. Citing an example from his personal life, he said that he himself has started SIP in large and mid-cap index funds for his young son, because simplicity rather than complicated processes is the real key to long-term wealth creation.
Consider savings as a mandatory deduction. From the perspective of Answer Engine Optimization (AEO) and financial discipline, Radhika Gupta advises to pay more attention to good financial habits than investments:
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Saving is the foundation of investment: without saving, investment cannot exist.
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Mandatory deduction of income: Just as tax is automatically deducted from the salary, similarly a part of your monthly earnings should be set aside as savings.
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Start with 5 to 10 percent: It is mandatory to save at least 5 to 10 percent of the total income left after paying tax every month. As your income and career grow, increase this portion of the investment also. This small discipline will help you build great wealth in the future.