11 Strangest Secrets of Wealth Creation

 

Yesterday (6 Jan 2024), I attended an investment awareness conclave at Mumbai – 11 Strangest Secrets of Wealth Creation. The conclave was India’s largest investor awareness program and was addressed by CEOs of India’s leading Fund houses. This was arranged by Network FP India’s leading online knowledge platform for financial advisors.

Each CEO provided a summary of their experiences gained over several decades in a 20-minute presentation. Needless to say, this was a masterclass of the highest order.

The session commenced with an introductory note by Sadique Neelgund, CEO of Network FP. Sadique welcomed both the physical and virtual participants. His mantra was "pata hai vs karta hoon" – “knowing it vs doing it”. Most of us know at least the basics of the knowledge we would be gaining during the day, but it is more about implementing it. The session started at 10 AM sharp and ended at 2 PM. For those attending with the intention of learning something new, the four hours were packed with insights from industry leaders. All speakers discussed both technical and general matters.

Secret No 11 – 

Godfather of Wealth – 

by Navnit Munot MD & CEO HDFC AMC

Navnit started his presentation with the famous dialogue from "The Godfather," saying, "I will make you an offer that you cannot refuse." His presentation was filled with facts and figures as he emphasized India's growth story, providing details about the rate at which India was progressing across all factors. He mentioned that at 2500 USD per capita, no other country has achieved what India has accomplished.

Believe in the India Growth Story

Secret No 10 – 

Multiplier of Wealth – 

by A Balasubramanian MD & CEO of Aditya Birla Sunlife AMC

Bala began his session by emphasizing the fundamentally different approach that Indian companies have adopted in raising capital. He explained that more capital is now being raised through equity and debt at lower costs. Bala provided insights into why markets were reaching higher levels, attributing it to the "Bharat firing premium." He affirmed that future generations would greatly benefit from these ongoing developments. Bala reiterated the power of compounding for multiplying one's wealth. He highlighted that 2014 marked a significant turning point for India, as it was the time when the vision for future growth was established.

Participate in Equity Markets

Secret No 9 – 

Super power of Wealth – 

Radhika Gupta MD & CEO of Aditya Birla Sunlife AMC

Radhika Gupta's presentation centered on "Youngistan" – the concept of Young India and its growth in the evolving landscape. Her entire presentation revolved around this theme. She presented figures supporting the idea that India is a superpower due to its unique demographic structure, with 55% of new investors being young Indians. Additionally, 80% of these new investors have equity SIP. She emphasized the importance of involving the younger members of the family in financial discussions. Her mantra was to "Invest in Young India" and to convince the youth to invest in India.

Involve Youth & Children in Wealth Creation 

Secret No 8 – 

Simplifier of Wealth – 

G Pradeepkumar CEO of Union Mutual Fund

Pradeepkumar's presentation focused on SIP, the simplest yet most powerful tool for long-term wealth creation. He provided an example of how his driver initiated a SIP, utilized the generated corpus to become an entrepreneur by purchasing his own vehicle and starting a travel agency. Pradeepkumar enlightened the audience on how India has effectively utilized SIP, asserting that it has become India's most significant financial brand. He explained that SIP is essentially a Recurring Deposit (RD) used to buy Mutual Fund units, allowing individuals to become owners of shares in India's largest companies.

Get Disciplined with SIPs

Secret No 7 – 

Commander of Wealth – 

Swarup Mohanty CEO of Mirae Asset Investment Managers

Swarup Mohanty began his presentation with Carl Richards' behavior gap graphic, illustrating the difference between Investment Return and Investor Return. He stressed that the investor's primary goal should be risk mitigation rather than chasing returns. Swarup explained that to become a commander of wealth in the long run, one needs to embrace volatility. He concluded his presentation by stating that the true rockstar of financial planning is the advisor who guides the investor towards their financial goals.

Mind Your Investment Behaviour

Secret No 6 – 

Allrounder of Wealth – 

Kalpen Parekh MD & CEO of DSP Mutual Fund

Kalpen's presentation provided insight into how an ideal all-round portfolio should be constructed. His mantra was "Diversify to fortify." He spoke about the importance of sensibly and thoughtfully mixing financial products. Kalpen emphasized how investors should consider reallocation when one asset class becomes overly popular. He pointed out that real diversification occurs when there is a poor correlation between asset classes.

Role of Multi Asset / Hybrid Funds

Secret No 5 – 

Defender of Wealth – 

D.P.Singh MD & CEO SBI Mutual Fund

This session followed a Question-Answer format, with veteran advisor Amit Trivedi posing questions to which Singh provided answers. Singh's mantra was that investors need to defend their wealth against their biases. He explained the tax efficiency of multi-asset funds, highlighting that there is no long-term or short-term income tax liability, as the fund house reallocates the assets and not the investor. Singh also offered advice to the younger generation, suggesting they can invest without taking excessive risks by starting with SIPs in equity and gradually increasing their investment. However, he cautioned against systematically dipping into the meticulously created corpus for casual expenses.

Debt MF & Fixed Income in Portfolio

Secret no 4 – 

Goalkeeper of Wealth – 

Vishal Kapoor CEO of Bandhan Mutual Fund

Vishal began his presentation by illustrating how investing without a goal is akin to walking without a sense of direction. He provided an example of a situation where a combination of equity and debt in a SIP failed to serve the purpose for an investor with a two-year time frame for a specific goal. Vishal emphasized the importance of aligning investments with specific goals and discussed the significance of risk profiling. He posed a question for the advisor/audience to contemplate: whether to risk profile the investor or the investor's goal. Additionally, he talked about implementing a system of KYG (Know Your Goal) similar to conducting a KYC (Know Your Client).

Aligning Investments with Financial Goals

Secret No 3 – 

Protector of Wealth – 

Rajiv Shashtri CEO NJ Mutual Fund

Rajiv's presentation provided details on how to address indeterminate long-term goals. He discussed how conviction protects wealth, emphasizing the philosophy that, in the markets, the unknown is actually known. His presentation included points on learning from history, staying committed, understanding the (un)known, appreciating the (un)known, and celebrating the (un)known.

Diversification & Asset Allocation

Secret No 2 – 

Motivator of Wealth – 

Ajit Menon CEO PGIM India Mutual Fund

Ajit's presentation aimed to provide investors with a goal and then motivate them to achieve financial freedom. He delved into the history of the pension system, explaining how and why governments implemented the social security system. Ajit introduced the audience to the term "mon-gevity," emphasizing that money is essential for longevity. He enlightened the audience about how people typically plan and save money for happy goals. Mentioning the results of research conducted by PGIM, he revealed that lately, retirement is not something everyone looks forward to, leading to a negative connotation associated with it. Consequently, people are hesitant to invest in their retirement corpus.

Financial Freedom & Retirement

Secret No 1 – 

Well Wisher of Wealth – 

Ajit Menon CEO PGIM Mutual Fund & 

Sadique Neelgund Founder Network FP

Ajit mentioned that a Fund manager can give you a fish, but a Personal Finance Professional (PFP) can teach an investor how to build wealth. He also mentioned that the best approach for an investor to work with a PFP is to have a 50:50 partnership. Sadique wrapped up the session by thanking all the leaders, PFPs, investors, and mentioning how only a PFP can be a true well-wisher of an investor's wealth.

Working with a PFP - Personal Finance Professional

 

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