Rushabh Desai is the founder of Rupee With Rushabh Investment Services, which he started in 2020, after being an AMFI-registered mutual fund distributor for two years. But he started his career in the financial services industry much before in 2008, which coincided with the global financial crisis that began with the Lehman Brothers crash.
One of the strong memories he shares of joining the industry at that time was seeing the amount of money investors lost and at the same time the amount of money that was made by the ones who invested during that market crash and held for the long term.
To see that first-hand and not as historical data shaped and prepared him tremendously for the future, he says.
With an experience of over a decade, Desai has seen many market cycles and has a rich experience in mutual funds, financial planning, portfolio management, wealth management and family office. In a conversation with Moneycontrol, he tells us where we can invest Rs 10 lakh today.
Markets are witnessing increasing volatility in the last few months, do you think it is the right time for a novice investor to enter the equity market?
In my view, it is a very good time for investors to enter the equity markets. Valuations are not so cheap right now but they are reasonable. So if someone has a lumpsum amount, I would advise them to enter the markets in a staggered way rather than putting all their money in one shot, especially at this point in time.
From an equity point of view, you need to be patient with your investments to generate long-term wealth.
How should investors handle a stock market correction? What if share prices fall drastically? Many investors sell in a panic and then buy them later.
There are companies that will do well, and companies that won’t do so well. Every stock will have its own time and space. The best way to minimise risks so that a stock correction or a stock market crash doesn’t affect your portfolio much is to diversify. Diversification should be done in a way in which only the equity and/or a certain segment within equity of your portfolio gets affected (if it does) during a down market or a stock crash.
But you also need to understand that with equity comes volatility. You need to make volatility your best friend because bear markets provide you with an opportunity to make money in the future if you stay invested for the long term.
What is your advice on debt funds today? Experts believe we are nearing the end of the rate hike cycle. Should you invest in short-term funds or medium-term ones, right now?
Go for good quality products. Stick with high credit rating instruments. If someone doesn’t understand the complexities of the debt market, then going for simple bank fixed deposits is recommended. But otherwise, debt mutual funds and bonds are the way to go forward.
I think the RBI is not going to start cutting rates anytime soon and we are going to see interest rates to be quite high for some more time. So medium and/or long-duration corporate and government bond products can be looked at as a means to enter the debt market.
Is 2023 going to be the year for equity or debt markets, keeping asset allocation aside for a moment?
It is very difficult to predict the markets. Only time will tell that by the end of this year which asset class, equity or debt, will do well. Looking at the elevated interest rates in our economy and the high yields in the debt markets, 2 to 3 years are going to be a golden period for the debt segment.
If the equity markets continue to remain flat and sluggish for some more time, we can surely see a sharp rise in equities soon after a 2-3 year period. My advice: Don’t wait till then to enter the markets, don’t time. Take your positions now and systematically. If you remain patient, a few years of sluggishness and flatness in the equity markets will be rewarded with substantially high gains.
The government is also trying to fuel economic activity by giving a boost to consumption. So which industries according to you are going to benefit from it?
I am really bullish on four themes right now – Consumption, global technology, banking and financial services and pharmaceuticals and healthcare. We are going to consume everything from toothpaste to food products, from banking to technology services and hardware products on a day-to-day basis. The society is becoming more health conscious, so healthcare and pharma are going to keep playing a vital role too.
We are witnessing a wave of layoffs amongst major tech giants while geopolitical tensions continue to exist as well. So amidst this do you think investing in global stocks or funds makes sense right now?
With the world being interconnected at this time and age, I think global exposure becomes very important and cannot be ignored. I would mainly look at the US market; it is the largest economy with a stock market that is the mother of all stock markets. So global diversification, particularly in the US economy, is very important, more so now because of the steepness in the ongoing correction in the US market, and let’s not forget the long-term dollar strengthening against the rupee. In my view, investors can invest anywhere between 10 and 30 percent in the US market.
You should not go overboard in one market, so if someone wants to go beyond 30 percent, then having a cap of 40-50 percent would be recommended.
Asset allocation depends on a person’s financial goals and risk appetite but if I were to ask you how to allocate my investments between different asset classes, then what would that ratio be?
At this point in time, I would recommend investing 50 percent in debt and 50 percent in equities. I believe that even though you can’t predict the markets, timing is important while investing in the stock market. Valuations are reasonable but comparatively higher against other economies globally right now, I would like to wait and let the markets correct and become cheaper so that it is lucrative to invest more money into equities.
What are the kinds of equity and debt instruments one should look at?
So if someone wants to invest in equities right now, I am very bullish on the US and China regions. They are in a corrective mode right now, so it is a good opportunity to venture into. In India, you can look at the value, balanced, advantage and small cap mutual funds segments at this moment. Apart from this, you can invest in corporate bonds or medium-term funds for debt exposure in your portfolio.
What is your one big investment mantra?
Be a value investor in growth strategy and a growth investor in value strategy. If you don’t have patience and conviction in your strategy, you will not be able to make money in the long term.