Ayshwarya Desikan, director and head of South India (Wealth & Personal Banking) at HSBC India, discussed the five most important financial lessons for first-time investors on the special show Smart Money on CNBC-TV18.
Desikan asserts that investors must use best-interest arbitrage to evaluate and allocate capital intelligently.
“There is always a chance to decide where you want to put your money or how it will benefit you. Traditionally, we have been advised to pay off our home loans, eliminate our debt, etc.
All of us are debating whether to prepay our debt or invest in the market. The 10-year CAGR on the Nifty has been approximately 12 percent, while the interest rate trends for the 10-year home loan that you typically tend to hold have been between 6.5 percent and 9% at best.
So there is plainly a 3.5 percent to 5 percent exchange opportunity which is accessible and that is the rate at which your portfolio was building assuming that you decided to contribute the capital as opposed to prepaying the credit.
Therefore, you need to comprehend where your capital is serving you most effectively and make an informed decision based on your timeframe and risk,” Desikan stated.
Desikan advised investors not to chase rankings when selecting an investment option because rankings are based on past performance. She said financial backers ought to take a gander at basics, their gamble craving, and their short and long haul objectives and afterward accept a call.
“Investors need to know what their short-term and long-term goals are, how much risk they are willing to take, and then allocate their investments accordingly rather than simply following trends when choosing where to invest.
Even if you go by the information that is available in the market, the best ratings that are available always talk about past performance, which might or might not work for the future.
If you do not know the fundamentals, you might choose a sectoral fund after the sector has risen or something like debt, for instance, when it is in a cycle of declining interest rates. Therefore, it is very important to comprehend the investment,” Desikan added.
She also stressed the importance of being objective and disciplined when investing. She advised investors to book profits or cut losses at the right time based on their risk appetite rather than making sentimental purchases or becoming attached to their investments.
