Banaras-based mutual fund distributor Ritesh Tibrewal was drawn to financial markets during his college days. After his graduation, he joined his family’s stockbroking business, which was founded by his uncle in 1974.
His foray into financial markets coincided with the Information Technology (IT) boom. Over his two-decade-plus journey in financial markets, Ritesh has witnessed many ups and downs over different market cycles which provided a good learning experience while guiding clients.
Ritesh vividly remembers how online trading was introduced when he was in college in 1997. “We were among the early adopters of a trading terminal in Eastern Uttar Pradesh state. We had an office in Varanasi. When I joined the firm, we inaugurated another branch in Bhadohi, a city famous for its hand-knotted carpets. The IT sector was booming back then. The market crashed 13% in September 2001 which created panic among investors. But those who stayed invested reaped the benefits,” recalls Ritesh.
Today, Ritesh has branched out from his family business and runs his independent practice from Bhadohi, Uttar Pradesh. He provides stockbroking services in partnership with Sushil Finance while the mutual fund services are offered under his individual license.
Early days
Ritesh has played a key role in mobilising Initial Public Offering (IPO) subscriptions for many of India’s public sector banks like Union Bank of India, Allahabad Bank, UCO Bank, among others. This helped him build his early set of clients.
He also mobilised a good chunk in Corporate Bond Funds which yielded better than FD returns in the erstwhile regime when capital gains after one year were tax-free. “Investors were investing in Debt Funds by withdrawing from bank fixed deposits as capital gains were tax-free after a year. This anomaly was plugged by Budget 2014 which raised the Long Term Capital Gains Tax (LTCG) holding period to three years for debt funds with the benefit of indexation.”
His firm provides a bouquet of services like trading in cash, derivatives, currencies, insurance, and mutual funds. He currently manages around Rs 200 crore assets in mutual funds, where he forayed in 2014. “I liked the fact that we can get a lot of retail clients in mutual funds as the ticket size can start from Rs 500-1,000.”
Goal based investing
Ritesh likes to practice what he preaches. He started a SIP for his son Vihaan when he was just four days old to accumulate a corpus for his higher education when he turns 20.
Whether retail or high net worth individuals (HNIs), Ritesh makes sure he understands clients' risk appetite and goals before making any recommendation. When it comes to equities, he urges investors to remain invested at least for a period of five years or more to ride out any intermittent volatility.
His focus is largely on helping investors participate in markets through systematic investment plans (SIPs). Right from the inception of the client’s investment journey, Ritesh makes sure he has set the right return expectations among his clients. He prepares his investors mentally for the bumpy ride they can experience while investing.
Given the kind of volatility the market is witnessing currently, he is recommending investors Balanced Advantage Funds to ensure that they have the right equity/debt exposure while navigating the market.
He recommends Mid Cap Funds for aggressive investors who are comfortable with relatively higher volatility and prefers to stagger investments in Small Cap Funds during every dip.
Don’t let greed take over your investment decisions
Ritesh advises caution to the new breed of investors wanting to make a quick buck in the market. He advises them to invest via the mutual fund route. “You may invest a large portion of your investable corpus in two to three penny stocks. If one of them tanks, you will have a terrible experience recouping your capital. Mutual funds are well regulated and can provide a much better experience in containing downside and at the same time help you achieve your life goals.”
Ritesh gives more importance to curating a list of funds for his clients which can offer downside protection rather than seek higher alpha.
Focus on investor awareness
“My motto is not to get more and more clients but to raise awareness in the city I operate. If more people are educated and aware of the importance of investing, we will get our due share of clients. We conduct many investor awareness seminars to educate investors.”
He observes that most of the queries he gets in his investor seminars revolve around returns.
Ritesh says that while investors should seek the guidance of advisers/mutual fund distributors (MFDs), they should also spend time understanding fund strategies, markets, and the economy to be in sync with our thought process behind building their portfolios.
He has observed that many direct equity investors tend to sell their stocks when they suffer losses and tend to buy the same stocks when hit a new high. This is why he insists clients have a longer time horizon if they have bought good stocks. “During a bull run, all stocks run-up but during a bear phase, quality stocks offer downside protection while fad stocks are dumped. We have seen this trend with many IPOs that were recently listed. Companies come out with IPOs only during a bull run when they can get maximum valuations. Investors should study fundamentals like the valuation of the company relative to its peer group. Don’t go by what your neighbour or friend has bought.”
Ritesh observes that technology is a double-edged sword. While digitisation has helped investors and the industry make transaction processing swift, the availability of daily portfolio valuation at the click of a button nudges investors to act when their investment value falls, which defeats the purpose of compounding. His advice to investors is that they should actively engage with their MFD/adviser at least once a quarter to see if they are on the right track and make any course corrections rather than keeping a hawk’s eye on daily portfolio performance.
Insurance is a must
Besides investments, Ritesh observes that the pandemic has helped people realise the importance of having a safety net in terms of a Mediclaim. “People have seen the hospitalisation costs during the Coronavirus pandemic. Loss of income due to lockdown coupled with the burden of hospitalisation bill severely burdened people. A Mediclaim policy can help you get treatment in a good hospital under the guidance of experienced doctors. Some people delay buying insurance thinking they are in the best of health. But what if the sole breadwinner is hospitalised? A Mediclaim can help financially and at the same time provide mental peace to your family.”
He draws his point with the analogy of motor insurance where third-party insurance is mandatory before taking the vehicle on road.
Ritesh urges people to not equate insurance with investments.
Similarly, Ritesh says that a term plan is essential to help dependents continue their education, and take care of household expenses and other goals in the event of an untimely demise of the sole breadwinner. “A common thought harboured by many well-to-do people is that they have a lot of real estate in terms of land parcels or house which can take care of dependents. But real estate is not liquid. Further, potential buyers would realise that it is a distress sale and may not yield the prevailing market price. It can take months or years to liquidate such assets.”
Keep learning
Ritesh concludes on a humble note that he is a learner of the market. He says that even legendary investors like Rakesh Jhunjhunwala and Warren Buffett can make mistakes. We as retail investors should learn from our mistakes and invest keeping in mind our goals. “I learn from my novice investors as well as experienced fund managers. Never repeat your mistakes and keep learning no matter what your age is.”
