Kerala - Kozhikode   

Students urged to save early, invest cautiously

Kozhikode: The need for students to develop a saving habit and acquire skills in trading at stock markets were underlined by S. Jayachandran, Manager of ICICI Securities Ltd., Kozhikode, at a programme of the Business Line (BL) Club in Muttil, Wayanad.

“Invest long and pick and choose your stocks and shares with exceptional care,” was his advice to the students at the programme of Business Line, the business newspaper of The Hindu, on Monday Mr. Jayachandran illustrated his point with an example from real life. The value of a Rs.10,000-investment in a specific Indian company in 1980 would have grown to Rs.3.3 crore by 2005, if the investor had held on to his investment. Just 100 shares in Wipro, which had a face value of Rs.100 then, would have multiplied through successive bonus issues and stock splits to several lakh shares, generating the 330-times growth in value.

Speaking on the topic ‘Introduction to investment planning and investing in equities,’ he pointed out that as the economy had gained momentum, people’s financial goals had become much more ambitious.

Having shifted their goal posts, people would have to chalk out new investment strategies and plan very early and with utmost care to attain these financial objectives.

Students, he said, should start saving early not only to imbibe a savings habit but also to create a base for their investments for tomorrow. Later, salary surpluses should form the basis for investments. Based on their financial goals and investment surpluses, individuals could build up a portfolio in equities, mutual funds, gold and real estate, matching long-term risks with potential returns. He said investment in equities would be best undertaken with the right intermediary, who could advise them on systemic risks like potential inflation and political uncertaintyas well as company and industry specific non-systemic risks such as raw material availability and market for the specific product of the company.

The Mutual Fund route was a reliable and safe route to enter into capital markets. With interest being shown by Foreign Institutional Investors (FII) and Indian institutions in Indian markets, picking equities through Initial Public Offers (IPO) was another relatively safe entry. Purchase of equities from the secondary market should be backed by sound market knowledge and financial acumen. Investing in bonds and debentures, fixed deposits and other financial products would also reduce the risks further. A portfolio comprising diverse products with varying risks and returns should be built up depending upon the corpus of investment and expected returns, he said.

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