Investment requires proper understanding and assessment of risks, concur experts at TechSparks

Investment requires proper understanding, knowledge, and assessment of risks, concurred the co-founders of Share.Market by PhonePe, PeepalCo, and LXME during a panel discussion at TechSparks 2024 in Bengaluru.

There is rising awareness surrounding wealth creation and investments. According to the Association of Mutual Funds in India, Indian mutual funds currently have about 9.61 crore SIP accounts. 

“Today in mutual funds, we have more than almost 20 crore unique folios. People have realised the power of compounding, and investing in markets. And, in their growth story, mutual funds have played a pivotal role in making sure that people invest,” said Ujjwal Jain, CEO, Share.Market by PhonePe, an stock market app. 

On the other hand, broking sees 17 crore demat accounts and 10 crore unique PANs, making it ahead of mutual funds, which has about 5 crore PANs, he added.

There was a boom in the number of demat accounts being opened post COVID, especially by "young Indians", said Ashish Singhal, Co-Founder & Group CEO, PeepalCo, a wealth-tech company. 

While the earlier patterns included saving in bank accounts and FDs, before venturing into compounding, Singhal said, “Now young investors understand that, in their early years, they can take higher risk, can explore more opportunities in different segments and learn. And compounding brings in more value, because they start early."

Lemonn, an app by PeepalCo, aims to help make decision-making and discovery easy.

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Emerging trends

Singhal sees a future with a large-scale model that works for millions of people.

“Today, we don't believe that the technology is there yet to be able to build an advisory or build a robo-advisory at that scale,” he said.

Singhal believes that risk is an area that calls for improvement. 

According to Jain, “ASBA (application supported by blocked amount), where you block your money from your bank account, and, directly, when you get an allotment, your money moves... They are trying to bring that in the secondary market also for daily transacting directly on stock through UPI.”

Jain sees this as part of the DPI (digital public infrastructure) extension, where a single or multi-debit on UPI will come in the secondary market. He believes this will be a game-changer for first timers entering the market.

Women in investment and management

Commenting on the presence of women in financial platforms, Ridhi Kanoria Doongursee, Co-founder, Director, LXME, an online investment platform for women, said, “Opening a demat account has become a 2-5 minute task as compared to a 30-page signing previously. But less than 10% of these platforms have women."

“There's a concept called the 'invisible woman'. Financial services have been made a certain way; they don't cater to a woman... A woman needs more support. She needs emotionality. She needs simplicity," added Doongursee.

Commenting on the use of AI/ML, Singhal said, “We are not using it [AI and ML] as much as we would like to. Currently, from a financial standpoint, it is still exploratory and it's more data analysis, rather than machine learning and AI.”

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“We have a great savings economy, but we're not growing money,” said Doongursee, reiterating that the traditional methods still prevail especially among women who worry about being considered "money minded, silly or unintelligent."

This, she believes, is due to socioeconomic conditioning.

LXME has a one-hour bootcamp where "any woman in India can walk away with the knowledge of how to manage her money, how to build a financial safety net, and start on her financial dreams."

The startup has seen numerous stories of women who have benefitted from financial management.

Recently, a woman from Haryana, going through a tough financial time, learnt how to save up and took her family on their first holiday in 12 years, Doongursee recounted. Another woman became the first person in her family to buy her own house; and a single mother found the courage to continue with life and is bringing up her son, she added.

Investment advice

Concluding the session with learnings and suggestions from personal experiences, Doongursee said, “Start small, think big. The next 15 years are very exciting for India."

Adding a word of caution, she said, "Everyone does well in a bull market. Be careful of the bear market, and ensure you're diversified, asset allocated. Don't just take the last three years as your only learning."

Reiterating what Doongursee said, Jain stated, “Stay invested with a very simple approach and gradually build on it.”

The mistakes people make on stock broking platforms are a result of “adrenaline induced decision-making" which leads them to losses on both the investing and the trading sides, he said.

Singhal noted that, when the market goes up, everyone is happy and everyone sees their portfolio go up. However, newcomers must learn when the markets are not doing so great, how to keep fear and greed at bay and still make the right decisions, and the whys behind both success and failure.