In an interview with MintGenie, Akshar Shah, Founder of Fixed, an investment technology platform, discusses the impact of the recent withdrawal of capital gains benefit from debt mutual funds on their attractiveness and the government's goal of establishing parity among fixed-income investments.
He also highlights the benefits of investing in fixed income instruments for conservative investors and the growing trust of young investors in fintech platforms for long-term investments.
Edited excerpts:
Q. As the interest rates are quite high, should investors invest more in fixed income instruments?
Each individual should keep his investment goals, and subsequently the asset-allocation strategy paramount, while making any decision around investments. In context of prevalent interest rate environment, a good opportunity exists for investors to lock-in higher returns with the premise of a higher safety. Thus, one can consider to shift a portion of their portfolio from riskier-asset classes to Fixed-income products, which would ensure a stable income in form of timely payouts at regular intervals.
Q. Do you think young investors have started to trust fintech platforms for making long term investments? How is your experience with retail investors at 'Fixed'?
Young investors, typically people who have started earning not long ago, have shown an affinity towards investment FinTechs primarily for two pertinent reasons:
a. Digital journeys save on time and efforts, which facilitate an easier and seamless investment journey.
b. These platforms appeal to the tech-native youngsters for the ease-of-access they provide.
Due to these reasons, the adoption-curve has definitely witnessed a steep rise.
At Fixed, we deeply value the trust that investors have shown us, in form of transacting, recommending and appreciating our efforts, aim and vision of democratizing safe investments with higher returns. While we are still a nascent organization, our ethos of keeping the customer-experience cardinal, has made possible the high-trust we enjoy from our existing user-base, as well as the new ones we onboard.
Q. If some conservative investor has a low risk appetite, would you recommend him to invest only in the fixed income instruments, or is this only meant to be part of the larger portfolio?
Personal Finance is indeed a personal activity. A conservative investor can be one who has a low appetite for risk, or a lower time horizon. Such an investor, in general should keep a large portion of their portfolio into Fixed Income instruments, as these avenues come with a high-safety net and also generate decent returns. If one wishes to venture into the equities market, he/her should remain invested for a time long-enough, which allows time for capital appreciation.
Q. If we talk about the retail investors who aim to achieve their financial goals over a period of time, what -- according to you -- investing platform and asset class they should opt for?
One should first note down the investment goals he/she wants to achieve, and then chalk out the time he has for each goal.
Basis above, an exploration activity should be carried out to research the available investment opportunities, understand the risk-return profile of each, and then draft his asset-allocation strategy. They can even seek advice from a financial expert, who can take the burden off your shoulder and help you with an investment plan. Speaking on the investing platform piece, it is an enabler, and should be viewed with the same lens. Such platforms form the last leg of investment journey, assisting you to enter into an investment, once you have zeroed down upon where and how much to invest.
Q. Do you think the recent withdrawal of capital gains benefit from debt mutual funds will make these funds less attractive?
Certainly; the recent indexation-benefits removal which debt mutual funds enjoyed, will emasculate them and take away their luster. HNIs and retail investors who were parking their capital with such funds, will now find themselves to be at par with other products like Bonds and FDs. Eventually, we will witness a discernible transition from debt funds to FDs, which offer attractive returns, and come with the caveat of a higher safety. In broader context, the government's aim to introduce parity among all Fixed-income investments, will help FDs regaining their previous status of being one of the most favourable investmentavenue.
