From an amateur investor three years back, Priya Chawla is training to be a serious investor and investment advisor, though not the academic way. She hasn’t taken any formal course or training but took a headlong plunge into equities and mutual funds the day she had her own savings good enough to start building a portfolio.
After obtaining a pharmacy degree, she barely worked for a year with Nicholas Piramal. When the private sector insurance industry started recruiting, Chawla joined one of them and today she has converted all of her kittie-party members into small investors.
After a year as an insurance advisor Chawla had earned reasonable commission and put Rs 50,000 into equities. “I opened a demat and online trading account. Though my initial experience was not good, today that Rs 50,000 has become Rs 3 lakh as I stayed in the market with confidence.” Chawla made a decision that only her income would be used for investment into equities and that stood her in good ground as there was no need for her to panic when the value of the portfolio eroded in the short term.
As a beginner, she put her money in the fundamentally strong large cap stocks like L&T, BHEL and Tata Steel. Some of her purchase has been at the peak price and she has taken a long-term bet on them. In some stocks like SAIL, she has played around a lot. For instance buying it at Rs 40 and booking profit at Rs 70 and re-entering again at Rs 50, exiting once again at Rs 80 and still holding some as she expects the firm to do well.
If one can time the entry into a stock and work with a stop loss/profit strategy, it is good. But that kind of strategy requires serious study. She has had a good run with mutual funds as well. The money she had put in the funds two years ago have doubled. Chawla wants to take her profits out of the existing fund and invest them in new schemes. “I strongly believe in mutual funds. If you have a good idea of equities, you can invest on your own. Otherwise it is better to leave it to the fund manager,” advises Chawla to all her friends. She finds happiness in making friends realise that they should save and invest more, than reaping profit out of investments.
Her overwhelming confidence in the ability of the markets is reflected in her asset allocation – 80 per cent in equity and equity funds and 20 per cent in fixed income. “I am guided by only one vision -- to earn enough to pay for my only daughter’s education. Slowly, I would bring down my exposure to equity to 50 per cent,” she clarifies.
One’s risk profile is clearly linked to age and Chawla is aware of that. Chawla admits she is an aggressive investor. “I take advice from my nephew who operates a BSE terminal. But he is a safe investor and gives only safe tips. The riskier investment decisions are guided by my instincts,” says Chawla. Despite all her sane advice to her friends, the trader in her overtakes at times leading to risky day trading.
“One morning when I opened my online trading account page, I realised that Rs 30,000 was lying unutilised. I decided to trade with it. By 2 pm it became Rs 35,000. By 3.10 it was down to Rs 32,000. I waited till 3.15 and then closed the trade for the day. After all the heartbreak, I made just Rs 2,000. I know it is not worth the effort. Yet, I do get tempted to do day trading once in a while,” confesses Chawla. Day trading is akin to a betting game and better avoided as few can withstand the ups and downs of the game. Apollo Hospitals, Bajaj Hindustan, Videocon, Tata Tele are the few scrips which are trading below her acquisition price. She has reasoned out why she should stick to these stocks instead of booking losses.
Last week, she went to listen to the famous stock broker Rakesh Jhunjunwala. “He almost said that we should look at small caps now. But looking at the nature of the audience, he corrected himself,” says Chawla. She will look at small caps, though she feels that Jhunjunwala is correct in not advising small caps for an investor group which takes much risk.
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