How to grow your money: Ankur Warikoo & StockGro's Ajay Lakhotia share top 5 investment mantras at TOI's Right To Excellence Financial Literacy Summit

Looking at investments beyond fixed deposits? Is it okay to leave your money in bank accounts without investing? Is it necessary to invest? Is it necessary to invest in markets, whether through SIPs or stocks directly? What about potential losses? And more importantly, since you can’t time the markets, what is the best investment mantra? How does one plan investments, should you diversify your investment portfolio?

If you are an investor, or looking to be one, then the above questions hold value for you. At The Times of India Right To Excellence Financial Literacy Summit, two well known experts answered the above and decoded the best investment strategies that you should look at.

As part of the Dhan Ki Baat: Investment Strategies for Inclusive Growth session, Ankur Warikoo, Entrepreneur & Author and Ajay Lakhotia, Founder of StockGro spoke extensively on the top factors one should keep in mind when investing your hard earned money. We take a look at the top 5 points:

Ankur Warikoo, Entrepreneur & Author:

1. Starting at a very basic level, if you experience inflation of 6% that means if something is worth Rs 100 today, next year, it will be Rs 106. So the same 100 rupees if kept in the bank or under your pillow or underneath the mattress or in a wallet will buy less progressively every year. So your money is getting destroyed because of inflation. That is the simplest reason why you need to invest - to beat inflation.
2. Anything that beats the inflation is an investment, whether you buy real estate, gold, provident fund, ELSS, corporate bonds etc. What matters is that you are principled and accountable to your money. Your aim is to beat inflation. As long as you're beating it your money is growing faster than the rate at which is getting destroyed
3. Over a five year period, any five year period in the history of Nifty50, ever since it started - what is the probability you will make money? It's 100 percent! There has been no period in the history of Nifty 50 Where over five years the index has not made any money. Similarly, what's the probability that the Nifty50 over a five year period has made at least 8% returns, in effect beating fixed deposits? It's 90%. So now you extend it to 10 years, the probability that the Nifty50 has made 8% returns is 100%. As a smart investor, never try to eliminate risk in life. Time is the best way to manage risk in the stock market, if you want to be a long term investor.
4. Do epic s**t - which in investing means to diversify. Follow the 100 minus x rule. It means that if your age is ‘x’, and say ‘x’ is 30, then invest x% (that is 30% in this case) in safe assets, which could be a fixed deposit, provident fund, National Pension Scheme, savings certificate etc. And then 100 minus x percent, which at the age of 30 would be 70% is invested in the stock market because then that allows you to play with a slightly broader risk over a period of time. As you age, you invest in safer assets to protect your money and less in the variable assets which could be the stock market.
5. My opinion for investing in mutual funds is, you only need three mutual funds. One you need a Nifty50 which is a large cap mutual fund. Second, you need a mid cap or a flexi mutual fund. And third, you need a small cap mutual fund. This is an increasing order of risk - small caps, extremely risky, not preferred to go very high on but you should always have a nice percentage in there. So a good percentage in my head is 60% large cap, 25% mid cap, 15% small cap.

Ajay Lakhotia, Founder of StockGro:

1. The reason I always recommend markets is because markets are liquid. It’s very easy for you to move in and out and liquidate your assets. 90% of people love to talk about investment but live in a regret loop. Everyone looks back and says if they had invested money, they would have been rich.
2. Every time there has been a crash in the US market or India market, they have recovered by at least two times. So, whenever there's a correction in the market, that's actually the best time to go and invest your money.
3. When markets crash, it doesn’t mean that your wealth will get wiped out. You invested Rs 100, that may have reduced to Rs 80 in a particular year due to the market crash, but that doesn’t mean that your money has gone to zero. You can still cash out and fund whatever is required. On the other hand, if you invest in real estate, it is one of the most illiquid assets.
4. Start investing. The biggest block lies in starting, people are unable to bring themselves to start investing. At least start your investment journey.
5. Investment planning and portfolio diversification strategy is a function of the quantum of capital.

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