Learn How To Explore Smart Investments To Maximise Profits

Sandeep Tyagi, the founder of the capital market firm Estee Holdings, in an exclusive interview with ETV Bharat's Saurabh Shukla, likened successful investing to healthy eating, highlighting the importance of discipline and resisting trends.

New Delhi:Everyone strives for financial stability to cover their expenses and achieve peace of mind, but only a few manage to accomplish this in their lifetime. Those who succeed can be considered the most disciplined investors, as they have not been swayed by the noise surrounding investments and have trusted the knowledge they have gained from reliable sources and their hard work.

Sandeep Tyagi, the founder of the capital market firm Estee Holdings, has written a book titled 'The Little Book of Big Gains: A Guide to Investing Wisely', published by Bloomsbury, which states more about the 'peace of mind money'.

In an exclusive interview with ETV Bharat, he compared good investing to healthy eating, emphasising that it demands discipline and the ability to resist trends. While many aspire to invest wisely, but only a few are able to maintain this discipline throughout their lives. In the book, he explores how to maximise profits through smart investments in various market instruments, including mutual funds and stocks.

In his book, Sandeep Tyagi provides examples of early investors, who started their investment journeys at a young age and achieved good profits through mutual funds and different other options. He emphasises that everyone should assess their needs and begin saving accordingly.

Returns in the past 40 years

He also discusses the share market's performance over the past 40 years, noting that annual returns have fluctuated between 82% maximum and -52% minimum in any one year. When viewed on a rolling five-year basis, returns have ranged from 43% to -1.8%, while over 10 years, they have varied from 23.5% to 2.6%. According to him, the longer an individual remains invested in the market, the more likely they are to receive substantial returns.

He shared an example of an investor, who invested some amount of money for 40 years. If he invested conservatively, he would earn 21.7x his initial investment. However, if he invested aggressively and achieved an average return of at least 16%, he would earn 378.8x. That is 17 times more money.

Borrowing Money

He also discusses borrowing money in his book, emphasising that one should not borrow to purchase items that do not appreciate more than the interest rate on the loan. Alternatively, if the decline in value is less than the benefits they provide, it might still be worth considering. To illustrate this, Sandeep Tyagi uses the example of a car. He explains that while a car will depreciate if it offers comfort and efficiency for commuting, it may be a worthwhile purchase.

Another important point he makes is that if the repayment period exceeds the benefits derived from what you buy with borrowed money, it’s better not to borrow. For instance, if you take out a loan for an expensive vacation, the enjoyment may last for only a week or a few months, while the payments will continue for a much longer time. It’s crucial to compare the cost of borrowing, including interest, with the appreciation or benefits you receive from using that borrowed money.

The most dangerous words in investment

According to him, the most dangerous words in investing are “this is a sure-shot investment.” These phrases often circulate among friends in hushed tones after they’ve had a few drinks or while on the golf course. Such information is shared as a testament to their friendship, meant to convey loyalty and a desire to benefit one another.

He compares this type of advice to the impulsive decision of getting a tattoo after a night out, at the moment, it seems exciting, brave, and even logical. However, upon reflection, it’s rarely a sensible choice. The most important noise to avoid in investing is such unsolicited tips. Sometimes, these tips may even come from seemingly impressive experts on TV shows.