Mastering wealth creation: Expert insights from TechSparks 2023

In an era of economic uncertainty and financial fluctuations, the art of wealth creation has become both a paramount goal and a formidable challenge. As individuals, we aspire to not only protect our hard-earned assets but also watch them grow and flourish, even in the face of downturns and market volatility.

On Day 1 of TechSparks Bengaluru edition, industry experts came together to discuss the topic ‘Money Matters: Wealth Creation 101’, each with a unique perspective on building wealth. The panel included the likes of Gaurav Mathur, Founder and CEO, SafeGold; Ashish Singhal, Co-founder and CEO, CoinSwitch; Ashish Kashyap, Founder and CEO, INDmoney; and Ujjwal Jain, CEO, Share.Market. The session was moderated by Kapil Sharma, Digital Natives Head, Microsoft.

Striking a balance between savings and investments

Singhal set the tone by emphasising the importance of managing expenses. "You save, you invest," he said. However, he cautioned against letting expenses spiral out of control, as savings alone are insufficient. He highlighted the insidious effect of inflation on idle funds, urging attendees to consider different asset classes.

“When you're young, you can take a certain amount of risk. You should look for alpha in your investment class, you should allocate proportionately across these asset classes, making sure that it is giving you the right returns. As you grow older, your allocation starts to skew towards more stable generators of money rather than a riskier asset class,” he advised.

Speaking specifically about investments in cryptocurrency, he added, “I personally believe that your crypto allocation should not move more than 4 to 6% of your investment because it is a risky asset class.”

Jain's reflections focused on economic uncertainty. He highlighted the tendency for fear to cloud decision-making, especially when market conditions are uncertain. He encouraged a disciplined approach, advocating for understanding one's risk tolerance and adhering to a well-defined investment process. Jain's message was clear: regardless of market conditions, a consistent strategy is key.

Mathur distilled wealth creation into two essential principles: discipline and diversification. He challenged the notion that individual investors could consistently outperform the market. Instead, he advocated regular, steady accumulation of savings. To him, financial markets were a means to an end, not a source of entertainment.

Kashyap differentiated between traders seeking dopamine rushes and investors pursuing a more passive, automated approach. He talked about tools like small change investing and SIPs, designed to make investing accessible and straightforward. He reinforced the age-old adage of diversification, emphasising the importance of not putting all one's eggs in the same basket.

Monetising idle assets for economic growth

Demystifying the concept of digital gold, Mathur laid stress on its benefits over traditional physical gold. The key advantage lies in the ability to earn a yield on digital gold, a feat unattainable with idle physical holdings. Convenience also takes centre stage, with the ability to sell or convert gold at any time, even in the wee hours. His insights underscored how digital gold represents a lucrative and secure form of investment.

Expanding on the concept of digital gold leasing, Gaurav elaborated on the potential economic impact. Indian consumers hold an astonishing $620 billion worth of gold coins, an untapped resource that, if monetised, could revolutionise the economy. By lending out physical gold to borrowers, primarily jewellers, investors can earn interest, effectively putting their assets to productive use. Gaurav highlighted how this process not only supports the jewellery industry but also leads to job creation, ultimately benefiting the national economy.

Addressing concerns about potential risks, he shared, “Platforms like ours employ safeguards such as bank guarantees and collateral requirements for gold borrowers, ensuring the security of your assets. In the event of non-repayment, we have contingency measures in place, including the liquidation of collateral, to safeguard your investment."

Empowering investors with structured portfolios

Jain introduced the innovative concept of WealthBaskets, a product from Share.Market. These intelligently curated portfolios offer retail investors a structured approach to direct stock and ETF investing. The platform leverages cutting-edge technology and extensive research to ensure that investors can build diversified portfolios with ease. He highlighted that the democratisation of investment strategies, once accessible only to the ultra-wealthy, empowers retail investors to make more informed decisions and navigate the complexities of the financial world.

Jain then addressed the crucial factor of risk in investment strategies where he spoke about the importance of understanding an individual’s risk tolerance. He advised, “It's essential to assess whether you can remain invested through uncertain times and resist the urge to make hasty decisions. For instance, you might be willing to tolerate a 20% drawdown in your portfolio, but do you have the discipline to stay invested even during such challenging periods?”

“Understanding your risk profile and aligning it with your investment horizon, liquidity requirements, and ability to weather market volatility is paramount. This is why many investors adopt a balanced approach by including debt in their portfolios,” he added.

Discipline, process, and risk management in wealth building

The overarching message from the panel was clear: building wealth requires discipline, a well-defined investment process, and an understanding of one's risk tolerance. Each panellist brought a unique perspective, yet their messages harmonised into a coherent narrative. Moreover, the emphasis on understanding and managing risk underscored the importance of a thoughtful and balanced approach to investing.