‘Idea is to build wealth, not become rich overnight’
Several young earners have been hooked to equity investments since the stock market crashed in March 2020 in the wake of Covid. Checking up on the sensex has become a morning ritual for them, just like catching up on social media. Market corrections get these youngsters as excited as offers from e-tail players. They might find filing I-T returns taxing but are comfortable entering buy orders at limit prices on their brokers’ app.
“Is IRCTC stock overvalued currently?”
“Should I apply for the Paras Defence IPO?”
“Why are sugar stocks rallying? Should I be buying?”
These are some of the questions that come up on a WhatsApp group called ‘Financial Info’ created by a bunch of over 20-year-olds to discuss investments. Here profit-&-loss screenshots and links to news articles are shared apart from memes celebrating ITC stock rallies or back-to-back opportunities to buy-on-dips (market correction).
Several Gen-Z investors (aged 25 and below), a growing share of retail investors, told
TOI they make investment decisions after referring to financial reports, news articles, podcasts and opinions from a growing online community. Advice from ‘investing’ friends is another big factor that influences decisions such as which broker to choose and when to sell a stock.
Freelance copywriter Progyaa Dutta (25) allots a couple of hours every month to look for under-performing stocks and buys them if she thinks their long-term growth potential is intact. “I purchase a stock only if I am convinced by the rationale behind a ‘buy’ call in an analyst or news report,” Progyaa, who started investing last year, said.
Manjiri Satam (24) got hooked to the markets after she quit her job as an actuarial analyst early this year. “It hurts when I see how low the prices were last year. However, I have clocked 16% returns this year, which is decent as most of my savings are in FDs earning a measly 5%,” Manjiri said. Both Manjiri and Progyaa said they don’t buy stocks on a whim but instead use ‘watchlists’ with price alerts that come up in their notifications.
Despite their relatively low initial capital (usually between Rs 50,000 and Rs 2 lakh), many youngsters understand that compounding will help them grow their money and hence intend to stay invested even after the pandemic.
Social media platform Reddit has become a popular discussion platform for newbie investors. Forums like IndianStreetBets and IndiaInvestments have seen a surge in followers amid the pandemic. The posts in these forums range from “rate my portfolio” to “how to plan an exit strategy”.
An 18-year-old Reddit user, who is an engineering student, started investing in February this year with small savings from his allowance and cash gifts. “I look at what makes a company better than its competitors and how it adds value to people’s lives,” the teenager, who didn’t wish to be named, said. “The idea is to build wealth and not try to become rich overnight,” he added.
Dinesh Thakkar, CMD of Angel Broking told
TOI that the tech-savvy generation has grabbed the opportunity that brokers’ intuitive apps provided as there was no other option but to put savings into an asset that can earn better returns than FDs.
‘My doctor says problems start after 60. So tr(e)ading cautiously’
Devendra Dewasthale is a keen observer. He picks up useful conversations with friends and experts and converts them into golden opportunities. The well-travelled Dewasthale once visited a blue-chip company’s manufacturing unit, where he learned that the firm was benchmarking itself against the best in the world. He immediately bought the shares of this company which has since paid him rich dividends.
The 61-year-old Dewasthale, who has been investing in the capital markets for around 30 years, is elated with the sensex hitting 60K. “I have made good money on the markets over the decades,” he says while adding that he is equally comfortable with using technological platforms to make investments. “That way the control is in my hand,” he reasons.
However, when he was younger, Dewasthale used to speculate on nearly 40% of his portfolio. Today, only 5% of his portfolio is used to speculate on. “For the last 3-4 years, I have concentrated only on blue-chips. In fact, I have taken this decision against the advice of my financial consultant. I am happy with 15-20% returns, which is better than the bank’s savings/ FD rate,” says Dewasthale.
He withdrew from smallcap and mid-caps entirely and invested in index funds. “My approach now is safer,” says the self-employed Dewasthale.
Mumbai-based Srinivas Ananthan is equally cautious. “For the last 25 years, what I bought in my portfolio, I rarely sold. Looking at the market now, I am a bit skeptical and thus cautious about where I invest. For my children also, now I only buy select high-quality scrips,” says Srinivas, while concluding: “My doctor says, problems start after 60… I am not very comfortable!”
Therefore, most 60-year old investors are taking safer bets. Raja Iyer, 66, who started investing in the stock markets and mutual funds even before demat happened, used to follow his gut and invested in “anything and everything” till he reached the age of 50. “It’s a process of evolution. When you are new to something and much younger, you take a lot of risks. You speculate more than you invest,” says Iyer. What suddenly made Iyer’s become cautious? “After the red lines hit you below the belt, I realised I should be more prudent and study before making investments. I stopped taking risks after 50,” says Iyer, who retired from HDFC. This was the time when Iyer began to look only at the Nifty 50 stocks which form the crux of his investments. Iyer’s trading accounts are restricted to proven brokerage houses only.
The 61-year old Srinivas, a follower of Warren Buffet, has read ‘The Intelligent Investor’ twice. Srinivas, who started investing in the capital markets 25 years ago, does not believe in day trading. “I invest and don’t sell easily — only in emergencies. I believe in long-term investing and not short-term. The main purpose is wealth creation,” he says. He doesn’t monitor the market movements or his portfolio on a daily basis.
Call it an age factor, there is a pattern in which capital market traders undergo some change in their behaviour and attitudes towards investing and spending after a certain age. Dewasthale’s advice to young investors is simple: don’t believe in rumors.