India News Get -BusinessBenefits of Mutual Fund Investments; Radhika Gupta, CEO of Edelweiss | Sotck exchange
With people’s trust in mutual funds growing, some people on social media are claiming that mutual funds are a scam and an investment bubble is being created.
Commenting on this, Radhika Gupta, Managing Director and CEO, Edelweiss Mutual Fund, says that those who are saying this are very irresponsible people, making such allegations about a regulated sector.
Along with this, Radhika Gupta spoke about mutual fund investment, its concept, fund selection and risks associated with it, among others. the full interview…
1. Question: Mutual funds are right, to what extent? Answer: This is 100% correct. Today you get coffee for Rs 100, but you can invest with this amount. You can invest according to each risk profile thanks to a wide choice of products. After collecting the funds, you can get the money in 2 days. You cannot do this in any financial instrument. There is transparency in the regulations.
2. Question: There are a lot of ups and downs in the market currently, in such a situation, what should investors who have made large investments simultaneously and SIP in mutual funds do? Answer: The market goes up and down. After Covid, people only saw the market go up. People should know that investment is a 5-10 year journey. I say the same thing for good markets as for bad markets: investing should be as simple as pulses and rice.
Invest in things that make sense to you and suit your risk appetite. If you invest money in the Indian economy through mutual funds for 10 years, you will earn money. There will be ups and downs in the market, it’s up to you to endure them.
Radhika Gupta said don’t stop your SIP, because when we go to buy a saree and get it at half price, we become very happy. When you invest in mutual funds through SIP and get them at a lower price, you should be happy.
3. Question: I would like to know the concept of mutual fund, how does it work? Answer: A mutual fund is a fund in which many people invest together and in which they entrust their money to professionals. He manages their money and if there is a fund of Rs 100 and you invest Rs 50 and I invest Rs 20, then as a result you get a gain of Rs 50 and you get a gain of Rs 20. There has a lot of regulations about it.
4. Question: What parameters should a common investor consider while selecting the right mutual fund? Answer: 1) What does a mutual fund invest in? In large stocks, in small stocks, in medium stocks. 2) How to invest and when it feels good and when it hurts. 3) How much return can this give in the long term and to what extent does this decrease. 4) Who manages this mutual fund?
5. Question: Where should investors buy mutual funds? Is it okay to buy mutual funds through a distributor? What is the impact on returns? Answer: I think if you need financial planning or advice, definitely get it from a qualified distributor. I think 90% of people need help. If you understand, there are many direct platforms, Asset Management Company (AMC) websites and many Fintech platforms. I can take it from there.
People always say there are fees to buy from distributors. He said when you go to the doctor you pay a fee. Likewise, when you go to a lawyer, you pay a fee. If you think someone’s advice is good, there are many distributors who give very good advice. You should use their advice. I promise you that the difference of 1% to 1.15% will be more than beneficial in advice.
6. Question: What are the risks associated with investing in mutual funds and how can investors reduce them? Answer: If you invest in stock mutual funds, the biggest risk is market risk. The market goes up, the market goes down. At the same time, if you take sector funds, the risk is higher. For example, if you take a fund from the IT sector, it will carry risks related to IT companies.
The way to reduce equity risk is time. The more time passes, the more the risk decreases. Along with this, Radhika Gupta said that the way to reduce sector and security specific risks is simple. You invest in diverse things. And at what time do you invest? If you buy a very expensive item at a very expensive time, the risk increases.
7. Question: What common strategies do mutual fund managers adopt to achieve their investment goals? Answer: Mutual fund managers try to identify good companies in the market, whose return on equity is higher than the cost of capital. Those that have good management and are available at reasonable prices.
8. Question: What are the common mistakes investors make while investing in mutual funds and how can they avoid them?
answer:
Investors have become very short-term investors, they want very quick returns. They started giving importance to the performance of the past year. I haven’t seen him for a long time. Leaving pulses and rice, I started looking for pickles and chutney. This means that instead of diversifying, they started looking for small new things.
9. Question: With the growing popularity of index funds and ETFs, how do you see the future of actively managed mutual funds? Answer: I don’t see this as a threat. I say there are many different products in our industry. Active funds are doing very well. We manage very good active funds. For those who want a simple solution without having to choose, there are passive funds, index funds and ETFs. Use them, locals go to Domino’s for pizza and also go to very fine Italian restaurants.
10. Question: Some people are making videos on social media saying that there is a mutual fund investment bubble. What is your opinion on this? Answer: These are not experts who say that. I haven’t seen such a video, I heard that some say mutual funds are a scam, a bubble. Those who say this are very irresponsible people and are making such allegations against a regulated industry. I don’t understand on what basis they say this. So far I have not seen any reel in which such an argument is found that is true. I think it is very irresponsible for people to make such videos for their own benefit.
11. Question: What should be the minimum and maximum number of mutual funds in an investor’s portfolio? Answer: Usually many people work in 5-10 mutual funds. Some people even have 200-300, so you’ve got the whole deal.
12. Question: If you invest 100% of your money in the stock market, how risky can it be? Answer: No one should keep their entire investment in stocks, asset allocation is very important. I say wallet like dal rice, but we don’t just eat dal rice. Roti is also eaten with it as it is a balanced diet. Likewise, there is a balanced asset allocation, so stocks, debt and gold should also be included in your investment.
13. Question: Your dal chawal reel has become very viral, I want to know more? Answer: Yes, this concept is very popular. I didn’t become the brand ambassador of the pulses and rice company, that’s what remains. Food is something that everyone in the country understands well. I believe that the things that are good in life are also good for investing. I was trying to explain investing in a simple way.
Dal and rice are nationalized, if you are in the North then the type of dal and rice that is made there will be made there. Going south, lentils and rice become rasam and rice. Along with this, it is spreading across the country including Madhya Pradesh and Gujarat.
14. Question: If we are talking about people with low wages, what is the minimum investment they should make? Suppose someone’s salary is Rs 30,000 per month? Answer: You should try to invest at least 10% of your salary after tax. If you can’t do that, I say do something and do it over SIP. With this, investing will become your habit.
15. Question: Do mutual funds have a limited reach to cities or do they also reach villages? Answer: Mutual funds also reach the villages. It has reached thousands of Level 1, Level 2, Level 3 and Level 4 PINs, but it still has a long way to go. It has not yet completely reached the cities. Many people know what SIP is, but they haven’t gotten started yet.