Uncertain times like the coronavirus pandemic have us all thinking of ways to be austere and careful with our money and assets. What lies ahead in the economy and just how can women gear up for volatile times? As the world undergoes changes would the global investment scenario change drastically and if so, how can women prepare for that?

At such times, SheThePeople brings the essential conversation on Financial Fitness to the forefront with a special focus on women. Moderated by founder Shaili Chopra, we spoke Nilesh Shah, Chairman, AMFI and Managing Director, Kotak Mahindra Asset Management Co. on women, money and the investment scenario.

Also Read: From Piggy Banks to FDs: Ensure your Daughters’ Financial Fitness

Is it the right time to invest?

Since uncertainty might unveil an opportunity, in the long run, this could be a time for people to invest. Nilesh Shah says, “We could make money if we invest when valuations are cheap and whenever there is bad news like today, valuations will be cheap.” He emphasizes on the need for a discipline “of investing through the good times, through the bad times, through the good prices, through the bad prices.” He talks about the three main requirements for investment:

  • regularity
  • long-term orientation
  • disciplined allocation. One needs to be regular, should invest in long-term schemes and allocate funds in different domains like equity, debt, gold, real estate.

He advises being a student rather than the master of the market. Adding to this, he says, “Market is not only about fundamental knowledge, but it is also about understanding behaviour.”

The post-corona world

He anticipates rapid changes in the post-corona world and feels, “Most of the young population will realize the importance of savings. Many of them lived a life where income minus expenses were savings. Now, it is income minus savings, which will be given to expenses.” Talking about the changes in consumer behaviour he has predicted a shift in consumer choice from luxury brands to value for money brands. On being asked about the most affected sectors after the pandemic, he says, “The most-impacted sectors will be where there is physical touch, hotels, tourism, travel, aviation, retailing, multiplexes. The less-impacted ones will be agriculture, pharmaceutical, power, telecom, food processing, online distribution.”

Medical solution is a determinant for economic recovery

Calling the current scenario “the most unprecedented challenge”, Shah says, “The intersection of the medical solution and the fiscal and monetary stimulus will determine what happens to the market and the economy.” He explains that if a medical solution for the virus emerges at an early stage, then the stimulus would be rapid, wherein there would be a faster recovery like a V-shaped graph, “we will go down sharply, but we will bounce back also”. He adds, “The most unfortunate scenario for us would be where the medical solution is delayed for a long period of time.” He explains that the recovery would be L-shaped in this case, “we will crash rapidly, but we will take a long time to move back up.”

How to stay afloat?

Considering the difficulties being faced in retaining the usual investment plans due to the economic slowdown, he suggests a diversified portfolio from the savings’ point of view. He says, “Our whole purpose is to create a diversified portfolio across real estate, commodities, equities, fixed income. So that overall, no matter what happens in the market, we continue to get an above-inflation return.”

Mutual fund investments

A viewer asked if this is the right time to invest in mutual funds, to which, Nilesh says, “Market is always discounting all the news.” Irrespective of the fact that the market is aware of the pandemic, the associated uncertainty of the discovery of medicine and the hard-hit businesses, it is still remaining at the current level, even though the economy is falling. “The market,” he says, “might be discounting that the medical solution should emerge early. Second, the market might be discounting lower oil prices. maybe the market is discounting that world is going to appreciate India for going forward.” He thus suggests to go ahead and invest in mutual funds if one has money.

Regarding gold investment versus mutual funds, he says, “Make sure that you buy it (gold) from the right source. Second, if you’re buying gold for consumption purposes, that is, wearing jewelry, then it’s fine. But if you’re looking to invest from an investment point of view, then try to buy gold bars and biscuits instead of jewelry. Third, when you’re trying to buy physical gold in smaller denominations, keep in mind the transaction cost. So, there is a huge transaction cost for smaller denominations of gold, there is a marking charge for jewelry and you also have to take good care of you are gold. When you invest in mutual funds, you don’t have to worry about safety or transaction cost, all you repaying is the expense ratio for buying this fund.”

Women in the investment world

Shah remarks, “Women have the natural advantage to process multiple information. If they apply this instead of home affairs or business affairs, into the investment world, they will do extremely well. All women are good investors, they just have to recognise their power. They just have to take advantage of the natural benefits which God has given to them.” He further adds, “Women have a great ability to do very differentiated thinking and in the world of investment, differentiated thinking will always give you better returns. There is no point in following the crowd, you will make money when you are away from the crowd and women will be able to do it quite easily compared to men.”

Also Read: Ten Things Women Can Do To Have A Secure Financial Future

Article in partnership with AMFI, Mutual Funds Sahi Hai. Mutual Fund investments are subject to market risk. Read all scheme related documents carefully.

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