What was your first investment?
My first investment was after I started my job and it was in tax saving bonds. At that time, there used to be these bonds related to infrastructure which also provided for tax saving and ELSS as an instrument had a very low exemption limit. So we were in a way forced to invest into instruments like bonds and that was my first investment.
Let us talk about investment decisions and strategies. Which were the best or the worst investment decisions that you have taken so far?
That is a very easy one; my best investment has been the discipline of investment into equities rather than a product or a mutual fund scheme or a stock. I would just say that the fact that I have been disciplined right from the very beginning to make investments into equities as an asset class has proved to be my best investment.
My worst investment in a way came in the first couple of years where I invested into bonds because I wanted to save tax but from a slightly longer term perspective, that did not provide the returns which the other asset class like equity has provided.
In this scenario of global uncertainty and unpredictability, what is your asset allocation like now?
For me, asset allocation is predominantly into equities. I have always tried to find out what is the amount of money that I may need as an emergency fund or something which I may need to fund some event in the family. That is the amount which I have always tried to keep into fixed income and fairly liquid assets. Other than that, everything else goes into equity. As far as my personal asset allocation is concerned, I would be heavily skewed towards equities.
You are heavily biased towards equity; do you also have a fixed income portfolio and if you have, then can you share it?
It is predominantly into certain debt schemes of UTI itself and some portion is always lying in the bank account. It is very basic. There is nothing complex that I try to do in fixed income. Some amount of money in liquid funds, some amount of money into debt funds and some money lying in the bank in the form of FDs.
Do you think rebalancing is an important step that one needs to take whenever it comes to realigning your portfolio goals? How do you rebalance the portfolio?
No, as I said in the reply to the previous question, because everything predominantly is into equities and there is hardly any rebalancing. Other than keeping the amount that is required on account of some contingency, emergency or an event, everything else goes into equity and I am very happy riding through the entire volatility that happens in equity markets without feeling the urge to rebalance every now and then.
Normally, whenever we advise investors to make a financial portfolio, we tell them that it should be aligned to their financial goals. So, which financial goal were you able to fulfill with your investment portfolio?
I would say more than any material financial goals like buying a house, buying a car, funding child’s education, my biggest financial goal was to gain some amount of independence, some amount of mental security. My investment portfolio has done just that and provided me with some amount of security and a very liberating feeling in terms of being extremely independent and not being dependent on any set of events in my life.