How to invest smartly to be prepared for a pandemic-like crisis? Anurag Garg of Nivesh.com explains

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Updated: May 26, 2021 4:05 PM

Retail investors have not gone for panic reaction like stopping SIPs or large scale redemptions. Investors seem to have become more mature now, compared to say 10 years ago.

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Covid-19 pandemic has changed the way people have been investing their money and dealing with their finances for several years. According to Anurag Garg, CEO and Founder, Nivesh.com, one important change in behaviour observed during the second wave is that the level of panic among investors is low. Retail investors have not gone for panic reaction like stopping SIPs or large scale redemptions. Investors seem to have become more mature now, compared to say 10 years ago.

During the entire course of the pandemic, SIP trends have been healthy overall. Garg said that during April 19- March 20, an average of 9.83 lakh SIP accounts were added on a monthly basis. This number increased to an average of 11.78 lakh SIP accounts each month during April 20 – March 21. For April 21, this number stands at 14.08 lakh accounts. Asset under management in mutual funds of individual investors grew to Rs.17.06 lakh crore as of April 2021, an increase of 39.28% over April 2020.

“So clearly, investors have now understood the importance of building wealth through SIP route. Having said that, there could be cases where investors needed money for their short-term needs like medical expenses and they would have resorted to redemptions and stopping SIPs. New age distribution platforms like ours are also helping in this process (of more investor maturity) by creating the awareness and bringing in more transparency in the entire process of investment,” he told FE Online.

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Even as there is little financial panic, it is important to invest smartly to be ready for any crisis situation like the present.

Garg suggested that one would follow a proper asset allocation strategy linked to the age, income profile, risk preference and financial goal. Investors must build plans for their financial needs which could be few months or few years away. That helps in creating awareness of own financial position, leading to a more proactive approach to planning. A well thought out plan would have provision to be prepared for a crisis situation like the current one.

“We often see that investor portfolios are heavily skewed towards a particular asset class depending on their own personal preference, which is not the right approach. For example, a recent customer of ours had all of his investments in real estate. Real estate is a highly illiquid investment and difficult to realize in case of urgent need. You cannot sell it in parts,” he said.

According to the Nivesh.com CEO, a proper plan would allocate investments in equity, debt (both short term and long term), gold, real estate and so on. Equity will help grow money faster over long term and debt holding will provide stability and option to liquidate easily for emergency needs. Then having proper insurance is also important – both Mediclaim and life cover.

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