‘Overcome the fear of risk': Chief Investment Office, Birla Sun Life Insurance. : Business Line

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Time is an investor's best friend, says Mr Vikram Kotak, Chief Investment Office, Birla Sun Life Insurance. Young investors who have plenty of time should therefore use the same wisely to build a fortune for themselves, he adds.

What are your top financial goals?

Financial goals are closely aligned to our dreams and ambitions. They enable us to achieve them.When I started my career my top financial goals were - buying a house, starting a family, buying a fancy car and retiring early. With these ambitions set out, I asked myself how much it will cost and what efforts I need to put to achieve them.

So, what does money mean to you?

For me money has two key connotations. Firstly, it is a medium of exchange, thereby giving me purchasing power, which helps to fulfil my consumption needs. Secondly, it is a medium of investment, thereby giving me further wealth creation and maximization power.

How do you plan investments to beat inflation? 

To begin with, I adequately diversify so that my portfolio gives healthy returns across market cycles. Secondly, I maintain higher exposure in the asset class, which has historically given highest returns and therefore is the best tool for beating inflation - equity. The balance is invested in fixed income instruments, real estate and gold. While equity and real estate ensure that I maximise my wealth and beat inflation over long term, fixed income gives stability while gold protects the downside during uncertainties.

Does gold feature prominently in your portfolio?

Gold is rare, beautiful, and unique. . Although it bears market risk, gold has always been a secure refuge in unsettled times, thereby attracting wise investors. It helps me to diversify my portfolio and enhance risk-adjusted returns. However, to ensure wealth maximisation, I recommend having a larger allocation towards equities since in a growing economy such as India equities will surely outshine gold.

What has been your key learning experience from investment?

It is extremely important to overcome your fear of risk in investing. The fear of losing money holds back many people from investing even as everyone else around them creates wealth by investing. The truth is that it is riskier to park your money in a bank account as it keeps losing its purchasing power. Interest that you earn on your savings account is lower than the rate of inflation. So, investing is the only way you can grow your wealth. Always remember that risk comes from not knowing what you are doing. So, if you do not do the ground work before investing then you are taking a calculated risk on your investment.

Which has been your most profitable investment so far? 

Both equities and real estate have rewarded me considerably.

What is your message on savings and investments for investors starting their career?

When you are just out of college or just a few years into working life, it is time to start investing. Remember time is investor's best friend, and when young, you have plenty of it - perhaps two decades to save for your child's higher education and probably four decades to build your assets for retirement. I know retirement seems very far away right now. But look at it this way - if you start investing little amount each month from now on, then you will not have to invest as much as you would need to if you wait another 10 or 20 years before starting.

What are the investment books you wish to recommend for young investors?

One should read Intelligent Investor, How to Think like Benjamin Graham,Invest Like Warren Buffet, and Think and Grow Rich. These are all classic books written by veterans who have inspired the investment community for years