A K Sridhar is chief investment officer, UTI Asset Management Company.
In this interview, he shares his views on investing and on how to become a stock market investor.
His advice to investors...
1. The biggest mistake investors make is to invest directly in the stock market. They buy individual stocks of which they have very little or no knowledge.
On most occasions, it appears that no serious thought has gone into their investment. Retail investors tend to depend on tips or suggestions from others and assume the other person has evaluated that stock, which is often not the case.
That is why I tell investors who do not have the knowledge to buy stocks to leave it to the experts and invest in the market via a mutual fund.
2. A question asked very frequently by investors is: Should I sell my shares and book profits now?
Unless you desperately need the money to meet an expenditure that cannot be postponed, you need not take it out.
It does not make sense to sell your stocks and put the money in another stock without a very strong reason. Similarly, just because your fund has given a great return, don't sell your units only to take the money and invest in another fund.
Stay invested if you don't need the money for the next one to two years. Take it out if you want to invest in another asset class. Maybe you want to buy some land. Or, maybe, you have a goal like buying a home.
3. Investors who think there is some upside left in the market want to invest now. Those who have never invested in the market but want to do so now should invest cautiously.
Don't try to time the market. However brilliant or seasoned an investor you are, everyone gets fooled sometime or the other when it comes to timing the market.
Yet, sitting on cash is risky. If you do not need the money for two years, you can comfortably invest it in equity. The best way to do so is to invest gradually. If you have Rs 50,000, don't invest it in the market at one go. Put it in a fixed...