Ramesh Damani has one advice for retail investors running short of time
Wealth Creation Week: In a conversation with Anil Singhvi, managing editor of Zee Business; veteran investor and wealth manager Ramesh Damani provides his investment tips for investors on 'Wealth Creation Week' show. Damani is also the managing director (MD) of Damani Finance Pvt Ltd, chairman at D-Mart and a BSE member.
"For retail investors who don't have time to focus, should buy index funds," said Damani. By index funds, he means the funds which replicate Sensex or Nifty.
He advises that one should start investing early, find great businesses and must hold for the long run to make good wealth.
When asked about gold and real estate investment if it is a good option, Damani said, "financial investment is good than gold and real estate. The beauty of financial investment is that you get dividends. You can look at the dividend as an income coming from your asset every year. But in gold and real estate, unless you rent it out, you don't get any cashflow." It is also very important to be patient in the stock market, he added.
Talking further about investments, Damani said, "Majority of the people don't have time to focus or energy to pay minute by minute attention on the stock market, those people should not do trading, they should do investment. And the investing key is to buy good businesses. Every business keeps going up and down, it's not rummy and that's how companies work and grow."
Investors should try to time things such as a hike in oil prices, the Ukraine war, and bank crashes and these things will keep happening and we can not do anything about it. But, we can remain constant, find high-quality business and remain invested in that business over the next 10-20 years.
According to Damani, you should see the value of the company, not the stock price, it's a big lesson from Damani. The important thing is to have the courage of conviction to put money on the table and not go with the popular opinion like this and that stock may go up. Investors have to think independently and analyse the companies. There is nothing that we lose but if the market perception changes then you can make a lot of money, typically the share will come with a good dividend yield of 4-5 per cent so when you wait, you also get a dividend yield.
"Rather than buying high-flying shares, look at some shares which has low risk but high reward, which means heads I win, and tails I don't lose too much. That is the first thing that investors should look at," Damani further added. By low risk, he means, earnings and dividends are sustainable and the company has a track record of 20-30 years of doing business.
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