Learn from experience

“The time you spend in the market is more important than timing the market”, says Shiv Gupta, Head of Private Banking, RBS NV India. An Economics graduate from the University of Delhi, his advice on investments is simple and suave. Edited excerpts:

What are your top financial goals?

To save and grow a portion of my income at 2-3 per cent above the inflation rate, which will take care of the fundamental investment needs of my family (including housing & education), and to build a corpus which is adequate to eventually meet my family's needs post-retirement.

How has your idea about money changed with time?

Over the years, there has been a pronounced shift; from seeing it as a means to acquire possessions to its value as a creator of opportunities and a source of security. I've also developed an awareness of the fine distinction between owning money and being owned by it.

Tell us about your most successful investment... the one which made the most money for you?

It would have to be my investment in residential real-estate in Singapore a few years ago. It was made at a time where the market had been severely displaced and had just started on a cycle of positive revaluation much like the Indian market between 2002 and 2007.

One mistake on investing or saving that you regret?

At points in my early investing career, I didn't fully implement the basic principles of diversification by holding all my investments in a very small number of stocks. This resulted in severe portfolio losses during times of market correction.

How do plan your investments - do you seek professional advice or do your own research?

Being in the business of managing portfolios, I would have to concede that I have the advantage of access to deep investment insight from within the organisation which I use to manage my portfolio.

What has been your most important learning experience so far?

The recognition that cognitive biases like “throwing good money after bad” play a big part in our decision making and that it takes a lot of work to be conscious of them and to avoid them when making decisions.

Tell us about books or investment gurus that inspired you to think out of the box?

I'm sure I wouldn't be the only one to mention the name of Nassim Nicholas Taleb. His wonderful book, “Fooled by Randomness” has profound lessons on the behaviour of markets and is particularly insightful when examining biases and human irrationality as reflected in investment and general decision making.

How do you plan your investments to beat inflation?

Using the Indian capital markets as a benchmark, one would have to build a portfolio that creates a balance between income and growth. This results in a balanced portfolio with 40-50 per cent in equity based instruments, a similar amount in fixed income instruments and the remainder in alternative investments.

How has your asset allocation changed ?

My asset allocation over the years has changed from being heavily growth-focused (hence riskier), with a predominance of equities, to a more balanced portfolio, which includes fixed income and alternative investments. My investment approach has also changed from being a shorter-term trading oriented style to a longer-term goal-oriented asset allocation based one.

What's your message on savings and investing to young people just starting out on their career?

The time you spend in the market is more important than timing the market, so save a portion of your income no matter how small and start investing early. The best investing insights come from first-hand experience. Be clear about your investment goals and recognise that you are likely to make mistakes. Learn from them and try not to let them turn into irrational investing biases.

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