Mukesh Kochar of AUM Capital says there are risks in investing in a single financial instrument.

You need to properly diversify your portfolio, but over-diversification or under-diversification will not work. Rational diversification is key, says Mukesh Kochhar, head of national wealth. AUM Capital.

In an interview with mint genieKochhar said investors should refrain from investing in a single financial instrument or similar instruments as putting all their eggs in one basket can be a dangerous practice.

Edited excerpt:

How would you advise new-age investors to plan and execute their investment strategies?

Most of the new generation of investors have not experienced stock market downturns. Investors who entered the market post-COVID-19 are enjoying a market rally with less volatility. Bullish and bearish phases are synonymous with markets, and you need to realize that bull markets don’t last forever. So, start by allocating only long-term funds to the stock market and maintain proper asset allocation with goal-based investments.

You need to properly diversify your portfolio, but over-diversification or under-diversification will not work. Reasonable diversification is important. Invest regularly and take advantage of significant market declines. This is risky and you should not think of it as a way to make a quick buck, as it can deplete your capital. Avoiding penny stock noise is very important. When making investments, you need to look at the broader picture over the long term. These are some things to keep in mind.

The Portfolio often fails to meet its investment objectives. What should investors do then?

Investors generally invest more in a rising market and sell in a down market and stay sideways. Also, they start very slow and expect amazing profits in a short period of time to make money quickly. You should always invest more in a down market and wait patiently with regular investments until you can make a profit in a rising market. The longer you invest, the more the power of compound interest works and the more your money multiplies.

What are the most common mistakes that prevent many people from achieving their financial goals?

Even small financial mistakes can prevent people from achieving their financial goals. One such mistake is the lack of diversification across different asset classes. Putting all your eggs in one basket can be a risky move for any investor, so you should refrain from investing in a single financial instrument or the same type of financial instruments. Inadequate knowledge or ignoring prevailing market conditions are also mistakes that can make investors inefficient in achieving their financial goals.

Another mistake I made was not starting investing in my retirement plan early. To achieve financial security in retirement, you have to start early. Creating his PPF account and investments through SIP is a great way to build a larger retirement corpus. These are some of the mistakes that investors can correct to avoid facing financial crisis in the long run.

What steps should you take to stay informed about financial policy and taxation?

You should read financial newspapers regularly on digital apps. People are busy in their respective areas, so you can consult a financial advisor about such things.

The focus is on returns rather than asset allocation. What do you think about it?

Asset allocation is a fundamental that must be done carefully to achieve the desired results. Otherwise, overallocation or underallocation can occur and is dangerous. This can be based on holding period, expected risk return, market conditions, opportunities, hedging, etc. Returns are the result of asset allocation. Therefore, asset allocation is a process and returns are the result. Therefore, focus on the process rather than the result.

Many young people are now taking a leading role in managing at least part of their portfolios themselves. How do you foresee the future of asset management in the long term?

Currently, most of the retail volume is generated through online mobile applications, resulting in large investments from young investors. Advances in technology have made it easier for people to invest in the stock market.

At the same time, COVID-19 played a pivotal role in introducing these investors to the market. The stock market slumped and then gradually rose, allowing many investors to make profits for the first time. It is also evident that young people are taking advantage of the opportunities offered by the Indian market to save early so that they can achieve their long-term goals through the capital markets. This base is likely to expand further as the Indian market continues to offer opportunities to the younger generation.

The future of the wealth management industry is tied to human expertise and digital capabilities. Since COVID-19, the wealth management sector has witnessed a significant digital transformation. Wealth managers appear to be increasing efficiency by taking a platform-oriented approach, providing personalized assistance, and customizing investment approaches to create a holistic approach to meeting individual client demands. is. The introduction of technology increases the importance of data analysis while protecting valuable client-adviser connections.