‘I have been a believer in Indian equities’ :Business Line

Given the restrictions of working in the financial services space, I invest in equities via growth-oriented mutual funds: Vibha Padalkar, Executive Director and Chief Financial Officer, HDFC Life

Be wary of investments that promise abnormally high returns, but look to invest in assets that can beat inflation.

This is just one of the lessons you learn from Vibha Padalkar, Executive Director and Chief Financial Officer, HDFC Life, as she shares her insights on investments in an interview with Business Line.

What was your first investment?

At my father’s insistence, I kick-started my investments by opening a Public Provident Fund (PPF) account. I kept investing regularly into this account.

I also bought an endowment policy with a life cover, which in hindsight, forced me to save regularly.

How much do you set aside for investments?

I keep aside 40-45 per cent of my income for investments.

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What are your current investments? How are they spread across different asset classes?

I have always been a believer in Indian equities and real estate. I don’t directly invest in equities, given the restrictions of working in the financial services space. So I invest in equities via growth-oriented mutual funds.

I choose to keep away from sector specific funds. I also have a diversified portfolio consisting of real estate, mutual funds (both debt and equity), and gold exchange traded fund (ETF).

Has your portfolio mix changed significantly in the last few years?

I started off investing in financial products and went on to add real estate and gold ETF to my portfolio. The latter two have been more recent additions, in the past 5 years.

How would you rate insurance as an investment option?

Savings related insurance is a long- term product and if held over the intended period of 10-15 years, it could beat returns given by competing asset classes.

This is because fund management charge on Unit Linked Plans (ULIPs) is capped at 1.35 per cent. Exit barriers in the first five years of the policy force long term savings.

A lot of people are averse to discussing their eventuality and hence don’t have adequate risk coverage. This could be dangerous especially when they have dependants. By investing in insurance, they also get the much needed risk protection.

What is your expectation in terms of investment returns?

The post tax returns on investments certainly need to comfortably beat inflation. But I am very cautious of investment products that promise supernormal returns in the short run. What happened to UK investors who invested in Icelandic banks or the chit fund scam are cases in point.

What are the most valuable lessons you learnt?

First, save regularly with a specific amount. Second, understand your risk appetite.

Third, periodically rebalance your asset distribution. And, lastly, try not to time the market.

What has been your best and worst investment?

My best investment has been real estate (plot of land). The worst has been infrastructure-focused mutual funds.