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'Be happy with your returns'

Keep 33 per cent each in property, business and fixed income is the mantra that Manish Shah promoted being a nominal investor to a serious wealth manager, reports MC Vaijayanthi.

india Updated: Feb 05, 2007 00:08 IST

Manish Shah is not tempted by the massive returns investors got from equities and mutual funds in the last couple of years. He was inspired by a formula that a Marwari friend had given him years ago. “Keep 33 per cent each in property, business and fixed income,” is the mantra that he has diligently stuck to over the years even as he matured from being a nominal investor to a serious wealth manager.

After getting a graduate degree from Jai Hind College, Shah entered diamond trading. He started a diamond brokerage business in 1986 and branched into the jewellery business later. When his wife completed a jewellery design course, he passed on the jewellery business to her and continued with his trading and investment activity.

“Though I have been investing in equity for long, it was only in 2000 I took investments as a serious avenue and diversified into property and arts,” explains Shah. He found value in investing in property with a series of investments in the Surat property market. “It was easier to buy and sell property there and I went there on recommendation from friends.”

Shah made money in Surat and then moved to the Mumbai property market in 2003. A friend’s word alone should not guide an investment decision as at times it could be as risky as picking up tips from the uninitiated.

His strategy is simple. Book space in property under construction; build it up brick by brick. Finally, when it reaches the stage of completion exit with profits without having to go through the registration process and hence save on stamp duty as well. “Right now the property rates are high. I would like to retain the properties I had booked and probably look at renting it out, instead of selling for meagre profits,” says Shah. The cautious investor he is, never does he take recourse to borrowings to buy a property. Shah is well rooted in market realities and warns, “This is not an investment option for the common man, and the time is also not appropriate.”

Somewhere in between art caught Shah’s attention. He got introduced to it once again through a friend who in turn was a friend of Neville Tuli, who started the first art fund in India. When Tuli came up with the idea of Osian fund in 2005, Shah was a willing subscriber. Being a novice in the field of art, he had to spend a lot of time first to learn to appreciate art and then to spot the talent that would fetch returns. “I read a lot of books, go through auction catalogues of galleries and spend my Sundays doing the rounds of galleries,” says Shah. Indian artists are under priced and still there is a lot of room for value picks if one can understand art.

Shah’s aesthetics improved even as his investments started fetching average returns of 36 per cent. He goes to the artists directly. If he spots an early talent, buys their works and puts them on the block when they gain recognition. “You have to appreciate art before you become an investor,” emphasises Shah. He avoids buying or selling in an auction as it adds 35 per cent per piece in taxes and other costs. The money he makes by trading in art helps him fund the pieces of work he wants to own. Voracious reading might help in gathering knowledge, but ultimately, it is Shah’s instinct that aids his investment.

As far as equity investment goes, Shah has seen his investment sail through two decades of markets moving through scams, periods of sloth and massive bull runs. He has set aside Rs 10 lakh for the equity portfolio, governed by the philosophy of buy it, lock it and review it only when the bank statement arrives. Initially, he had picked up stocks like Ashok Leyland, Reliance Industries and such others during initial public offers. He is happy with the 15 to 25 per cent returns the equity portfolio has got him. “Satisfaction should be there otherwise there is no end to anything,” reasons Shah.

Shah cares for his family and it reflects in his asset allocation. He has put money in fixed income yielding securities and has insured himself against life risk and has medical insurance cover. By sticking to his investment philosophy, Shah has proved to be one of those rare breed of investors who is not carried away by temptations of high returns.

Email MC Vaijayanthi: vijayanthi.chakravarthy@hindustantimes.com