In investing, you learn by making mistakes—either losing your money or missing out on great opportunities. I can go on giving investment guidance in these videos. But I thought I should talk about the bloopers I made in my 20s and 30s, which have stopped me from becoming a billionaire. No, I’m just kidding. I couldn’t have become a billionaire. But I could have created far more wealth than I have so far. 

 Delaying my start  

I started working at 23 when I bagged a placement straight out of campus, after my MBA. It was a great job analysing and writing about mutual funds. But the pay was low. Rs 2500 a month was not a great package to start with, even in 1995. But as I used to take public transport and work overtime, I did manage to save about Rs 500 a month. But I didn’t think that was a big enough sum to invest. I was also paranoid about finding the right mutual fund to invest in. Therefore, I got down to making a serious start on my investments at nearly 30. That meant losing out on five years of wealth creation.  

Investing is a habit and the earlier you start it, the better you will get at it. If you are a youngster just taking home your first salary, don’t worry about finding the best products. Just get started as soon as you can. Watch our previous video on how to do it even with Rs 500. 

Unplanned investments  

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Once I began to earn the princely sum of Rs 7500 a month by 1998, I was able to save more. Every month, I’d have Rs 5000 or so in my bank account. Even after paying Rs 1500 to my parents (after a lot of persuasion), I had money piling up. By them, I knew the importance of investing. But my investing decisions were ad hoc.

I wouldn’t have a lot of time left over after work. When I had free time, I would invest lumpsums in mutual funds. Every year, I would do some Section 80C investments for tax savings and invest in Equity Linked Savings Schemes. I bought some stocks at random. As I didn’t plan any of this, I would forget about them.  

With mutual funds, this turned out to be a good thing because when I was alerted to some of my ELSS schemes 20 years later, they had multiplied. HDFC Taxsaver which I bought in 2002 at a Rs 20 NAV was at about Rs 800 by 2022. That was a fabulous return but it didn’t make that much difference to me because I had invested only Rs 10,000. Many of the shares I bought in 1998-99 took a beating in the crash of 2000, many of those companies had vanished ten years later. 

Today, if I look back on what has made the most money for me, it has been SIPs in equity funds that I started at the age of 32 or 33. These weren’t the best funds in the market. But I could keep those SIPs going even when I switched jobs, moved to gig work and faced tough  times on the personal front, because they didn’t need much tracking or changing in different markets.  Rs 24 lakh invested in 2 of those funds over 20 years is today valued at well over a crore.  Rather than spreading my limited savings over many random investments, a few focused investments in equity funds, would have worked better.  This showed me that having a financial plan and working towards a goal is important.  

Interrupting compounding  

The investment decisions that I most regret today, are not the wrong stocks or funds I bought, but the stocks and funds that did extremely well which I sold off too soon! In 2000, soon after I started investing in equity funds, the market crashed over 50%. That crash wiped out a lot of money in the funds I held then – Alliance 95, Birla Advantage etc. After the crash, I sold most of the shares and some of these funds to switch to safer investments like debt funds and fixed deposits. I was probably right to sell the shares. But had I held on to those funds till today, I’d have easily recouped the money I lost and multiplied it. I also regret withdrawing my EPF balance when I switched jobs in 2007 instead of transferring it.  In both cases, I sold good investments when I really didn’t need the money. I don’t even recall where I reinvested that money. Had I stayed put, compounding would have created wealth for me. That’s the third lesson. Never interrupt compounding unnecessarily.  

(Host: Aarati Krishnan, Producer: Anjana PV, Edits: Darshan Sanghvi, Camera: Bijoy Ghosh & Siddharth Mathew Cherian)

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