2024-08-21 09:07:19
New Delhi: Nilesh Shah of Kotak AMC has shared many important tips for investing in an exclusive interview. He explained how Indian investors can avoid common misconceptions and make the right decisions to get better returns. In a conversation with ET Now, Shah told three important things about investing. He described investing as Birbal’s Khichdi which takes time to cook. He also said that haste is the devil’s work. Come, let’s know here what are the 3 tips given by Nilesh which can make you rich.
Money does not increase if kept at home
First, money does not grow by keeping it at home. Many people think that the money kept at home will keep growing, but this is not true. Between the financial years 2020-21 and 2022-23, Indian families invested Rs 4 lakh crore in mutual funds. While Rs 2 lakh crore was invested in equity, bonds and debentures. In total, about Rs 6 lakh crore was invested. But, Rs 9 lakh crore was kept in cash. Nilesh Shah stressed that cash does not grow, but its value decreases due to inflation. Therefore, this misconception should be dispelled that cash will grow at home.
No returns without risk
Secondly, there is no return without taking risk. Shah said that between the financial year 2020-21 and the financial year 2022-23, only 7% of the savings were invested in real return products like mutual funds, bonds, debentures and equity. The remaining 93% of the savings were invested in cash, deposits, insurance, small savings and pension funds. These products either give less returns than inflation or give very little return. In such a situation, when 93% of the savings go into such products from which real returns are not available, then how will one become rich?
Right decisions needed
Third and lastly, how can a right decision affect you. Shah told from his investment experience that from tax point of view, most people’s first investment is in Public Provident Fund (PPF). If you had deposited Rs 12,500 every month in PPF for the last 25 years, this amount would have been Rs 37.5 lakh. After 25 years, this amount would have increased to about Rs 1.70 crore. And this would have been tax free.
But, if the same Rs 37.5 lakh was invested in ELSS through a SIP of Rs 12,500 every month for 25 years, the amount would have become Rs 4.4 crore. However, tax will have to be paid on this. Still, after deducting tax, you would have got an additional profit of Rs 3 crore. Shah said that haste is the devil’s work, investment is like Birbal’s Khichdi…it takes time to cook. Shah also said that due to inflation the value of cash keeps decreasing and it is not possible to get good returns without taking risk. Patience and correct information are very important for investment.