Investment Advice: Rakesh Jhunjhunwala

Playing the devil’s advocate and relishing the misfortunate of others is amusing for some. However, those at the receiving end of these troubles pay the price of their entertainment. These days, most people rely on the internet to verify facts. It might come as a shock for some, but the internet is not exactly the most reliable source of information. And, yes, that sometimes includes Wikipedia, too!  

While entering the uncharted territory of adulthood and the responsibilities accompanying it, learn the basics of “adulting”. It means becoming a productive member of society, saving for the future and the unexpected, investing, etc. Each of these serves as a rite of passage through generations. However, these new adventures are littered with pitfalls that could be a learning curve for some and a disastrous end for others.  

Without proper guidance, people would be lost in these unknown territories as they bump into problems and make avoidable mistakes. The same goes with novice investors who are newly starting their investment journey. Their commendable effort may go to waste without advice from those who have honed their skills over the years.  

In India, there exist a few titans whose expertise allowed them to amass a gross amount of wealth. One of the most well-known investors among them was Rakesh Jhunjhunwala. Known for his Midas touch, Jhunjhunwala was referred to as the Warren Buffet of India. According to Forbes’ Rich List, he ranked the 36th wealthiest man in India. As a professional, he was a trader and licensed chartered accountant.  

On 14th August 2022, Rakesh Jhunjhunwala passed away at 62. His untimely demise was a shock for those in the fiscal realm, but let’s not let his teachings go to waste. Jhunjhunwala’s advice helped hundreds of people reach their financial goals. And, you can be one of them, too!  

Read on to learn the top advice from Rakesh Jhunjhunwala that can help young investors or those newly entering the field. 

Top Investing Advice from Rakesh Jhunjhunwala  

Throughout his lifetime, Jhunjhunwala impressed the world with his expertise in the investment field. He managed to build one of the largest portfolios in India, running into thousands of crores purely based on his high-conviction stock ideas. His ability to take bold and calculated risks made him worthy of the titles he received.  

Start your investment journey using the teachings of Jhunjhunwala – and perhaps, you, too, might become the next Warren Buffet of India!  

Let your Investments Mature

During his lifetime, Jhunjhunwala emphasised the importance of holding onto your investments. A firm believer in long-term investments, he highlighted the numerous benefits of avoiding panic-stricken sell-offs. Moreover, he advised mutual fund investors to focus on equity mutual funds for better long-term gains. Continuing on the same, Jhunjhunwala believed that holding onto such funds will provide investors with an average of 13-14% returns for over seven years. 

Most articles on investments advise investors to hold off on selling their stocks or funds, and Jhunjhunwala agrees with them! It means enduring the strife caused by sudden market crashes and downturns. The longer you manage to retain these investments, the more you reap in the long run. 

Don’t make Emotional Investments  

A reporter once asked Jhunjhunwala whether he had any emotional attachment to his stock ideas. The then 50 year old investors responded that his emotions were limited to his family. He went on to say the following,  

“I would not say there is no emotion when you have invested for such a long period of time, but they are not such emotions that will not part ways.”  

So, what’s the takeaway here for investors? No matter how long you have remained invested or how loyal to a company you’ve been, exit on time. Despite owning a rich history of top performance, certain stocks and mutual funds may encounter a downturn. During such situations, investors must cast aside all emotional attachment and sell off those funds to curb losses. 

Additionally, he cautions overzealous investors about the risks of getting too greedy. A bear market might cause people to overindulge in purchasing stocks or funds.  

Conduct Research Prior to Investing  

While imparting his wisdom, Jhunjhunwala expressed the importance of thoroughly researching before investing in mutual funds. He advised investors to evaluate the performance of funds prior to investing their hard-earned income into them. It will prevent them from impulsively investing in schemes without conducting any research.  

After toiling away at work and managing strict budgets, it’s best to invest your savings into lucrative schemes. However, without adequate research, your ill-informed moves could lead to severe losses. Treat each investment with care and not like a gamble! Also, avoid blindly accepting tips on which schemes to invest. It’s best to personally conduct the research, instead of relying on hand-me-down information.  

Incorporate SIPs into your Finances 

Speaking on portfolio diversification, Jhunjhunwala believed in the growth of the Indian equity market as he promoted the benefits of investing via SIPs. Moreover, he advised investors to exercise caution and restraint while investing through such modes. He said,  

“The SIP investor is not coming to make equity returns. He is comparing it with other products like PPF and insurance. He will be happy if he gets a 15% kind of return.”  

Nobody should underestimate the power of SIP investments since they allow investors to inculcate the habit of saving and investing. However, Jhunjhunwala has warned investors about the drawbacks of letting greed takeover their investment strategies. He went on to explain that investors should suffice with schemes that offer 12%-13% returns. 

Armed with these advices, novice investors can begin exploring the world of investments without experiencing too many hiccups. That said, these advices can be incorporated with different investment schemes, not just mutual funds or stocks! Even after his demise, Rakesh Jhunjhunwala’s legacy lives on. Start investing in fixed deposits and mutual funds on Bajaj Markets today!