Not necessary to act on all latest investing fads

A cross-media storyteller, Chennai-based Ayyappan Ramachandran writes fiction, puts up theatre productions and makes films. A part of the budding community of young mutual fund investors, he has been making investments for about five years now. While he may have only a few years of experience, he surely understands the value of long-term investing.

A humble background
Born in 1995, Ayyappan grew up, as he puts it, in "a financially traditional" family where the only mode of savings was the bank deposit. Thus, he is quite careful about where he spends his money, a trait that is seldom seen in the young generation today. His parents came from Trichy, a quiet, little town in Tamil Nadu. Given the cultural differences between the two cities, he says, "While growing up, I had to deal with the duality of being prejudiced and open-minded at the same time, especially in matters concerning money."

Graduated in 2016 as a chemical engineer, Ayyappan started working in the same year as a business development analyst at a life-sciences-technology company. After working for five years, he quit his job and started his own small business. Ayyappan ponders, "Aspiring to turn my passion into a commercial venture and taking confidence from the growth of my investments, I quit my job in 2021 and started a creative-communications company called Tellable." He helps brands tell their stories effectively.

For his start-up, he did not have to exit any of his SIPs. The performance and consistency of his investments gave him enough confidence to quit his job.

The beginning of his investment journey
Unlike many of his colleagues who started planning ways to spend their first salary, Ayyappan, given his upbringing, knew he had to save some portion. After a few months of research, he embarked on his investment journey in early 2017. He reminisces, "My first introduction to the financial market was 'The Economic Times' newspaper which was placed on the centre table of my office reception. While going through it, I discovered different investment options available. I decided to find out more about them and also did some online research. That was when I stumbled upon Value Research."

Mutual funds were his first choice as he understood that stocks were a different ball game, requiring more study and careful planning. So, he left stocks for later. Although he had decided to invest in mutual funds, he did not know where to begin. He recalls, "I googled and found plenty of tips and tricks on many websites and blogs. However, I felt most comfortable when I went through the suggestions on Value Research."

Describing himself as a VR enthusiast, he says, "I am a fan of how Value Research uses creative storytelling to convey complex financial concepts. I have subscribed to the weekly VR mailers. The stories written by Dhirendra Kumar and his team of experts have broken down the complexity of mutual fund investments for me. I especially admire Dhirendra Kumar's articles. They are filled with humour, amusing anecdotes and easy-to-understand investment lessons."

His fund choices
This young investor has been making investments with a long-term view. Given that time is by his side, he is currently maintaining a 75:25 equity-to-debt allocation.

He takes his investments pretty seriously and has a dedicated framework for selecting equity funds. While talking about his way of selecting funds, he says, "I took a few metrics into consideration before investing. These included historical performance, expense ratio, AUM, track record of the fund manager, how each fund would contribute to my overall portfolio in terms of sectors, market-cap distribution and VR rating." He currently invests through the SIP route in five different funds: Mirae Asset Tax Saver, Quant Tax Plan, Mirae Asset Emerging Bluechip, Axis Bluechip and PGIM India Midcap Opportunities Fund. Further, he has also been increasing his SIP contributions over a period of time.

But what does this newbie do when he sees his fund underperform? Like a pro, he says, "I refrain from tracking my funds frequently." During the fall of March 2020, while some of his acquaintances panicked and withdrew their investments, Ayyappan chose to remain calm and cautiously made some new investments. To avoid unnecessary worry, he altogether stopped checking the performance of his portfolio.

However, he does have it all mapped out in case he ever gets trapped with an underperforming fund, "In case it happens, I would check if the underperformance is because of any fundamental industry changes or economic or national situation. If so, I would decide to wait till some time. If the problem is specific to the fund (which has not happened to my investments so far), I would opt for an SWP and rebalance my portfolio," he says.

The learning curve
His limited-yet-enriching experience is not without any lessons. One of his early learnings was not to confuse insurance with investments. So, instead of spending on endowment policies, he chose a term cover.

Ayyappan faced hard times with one of his debt-fund investments. "About `2 lakh of my money (and my parents', obtained after some convincing) disappeared as if by a magic trick." But he didn't let this experience demotivate him. He studied the subject and learnt how to spot bonds of inferior quality and rating. "Nowadays, I go beyond credit ratings and glossy summaries and dig deep into the quality of the fund's components," he shares.

As he signs off, Ayyappan provides prudent guidance:

• Don't react to short-term market volatility.
• It is important to stay up to date with the latest investment trends but not necessary to act on all of them.
• One should understand how each fund will contribute to one's overall goals and investment diversification.
• Apart from material returns, investments can give you psychological safety and even teach a lesson or two about patience and discipline. So, the bottom line is - save; research; invest; stay patient.

This story was first published in May 2022 issue of Mutual Fund Insight.

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