Neither does Rohira, the CEO at 5nance, subscribe to Jhunjhunwala’s thoughts that one shouldn’t invest in the IPOs at all. He simply suggests that returns from IPOs have tapered in recent times.

Then what is it that sounds like a profitable investment bet. Read this conversation between Dinesh Rohira and Sify.com’s Sairaj Iyer to find out this investment formula.

Both the Nifty50 and BSE Sensex have reached record highs this month. This despite the negative consensus on the overall economy? Is there some indication for investors?

Yes, surely, the markets are buoyed by fundamentals and shrugging off any global negative news. This is a result of two things: the euphoria in the market about a better future in lieu of the government reforms and policies especially given that they are seeing positive changes in the economy despite numbers reflecting GST and demonetisation impact and secondly, due to the perception that markets still steam for another year or so before it gets overvalued basis the P/E.

We have read from news reports of interest dipping for traditional investment avenues like real estate, Gold, and even equities markets, but newer avenues like Mutual Funds and even things like Bitcoins has suddenly surged. What is your take?

I think the interest for equities especially has actually gone up over the last year. The over-subscription of IPOs is a reflection of that. Traditional modes of investment are still in favor with investors. Just that the interest in gold has subsided due to low returns even during volatile times. The property market has been stagnant due to govt crackdown on black money and RBI tightening lending norms. Everyone is waiting for the property market to ease in order to start buying homes for investment or otherwise. This trend is expected to continue in the next couple years till clarity emerges in the policies and stabilization happens over time.

To this regards, how successful have gold bonds been?

Gold bonds have been off-colour and out of favor with investors since their launch. Firstly, it is due to the 5yr lock-in period of each SGB issue that hinders short-term investors.

In other words, if you have a specific goal of buying gold for child’s marriage or any other goal, then it might provide a cost-effective and tax-efficient way over buying physical gold or gold ETFs as there are no making charges or exit load but people are yet to get used to it and that creates a second problem of low liquidity in the sense that you cannot offload it on secondary market at your own will at the market price. 

Nevertheless, for long-term investors who are into accumulating gold and those who have specific goals can go ahead with this attractive option.

What can you suggest as the most profitable avenues for our readers?

Equities have definitely been profitable over the last few years. We have been suggesting investors to invest in Equity Mutual funds and our variable SIP products like FIT-SIP have also been designed to take advantage in the offered by equities. Even real estate has been profitable for investors who have invested in last few years. We still feel gold should be accumulated for the long term as markets could become volatile anytime in near future.

Is there a universal formula that works for a safe, sound and yet profitable investment bet?

The best way to build the best portfolio is to park at least 20% money in liquid funds which aim to give better than FD returns while having a similar risk profile and gradually putting the rest of the 70% money in debt + equities which serves to grow your wealth and ensuring an alternate stream of income, 10% in gold which will also act as inflation hedge and safeguard against volatile times.

Rakesh Jhunjhunwala avers against the current trend of IPOs. With too many IPOs coming, How profitable and secure do these seem to be?

Read more about what Jhunjhunwala, the ace billionaire investor has to talk about IPOs here

Yes we have seen some successful IPOs of late such as MAS Financial and Godrej Agrovet clocking massive returns on listing day. This is the appetite of investors these days that IPOs like these can command such valuations in lieu of good fundamentals. With a string of better looking IPOs lined up such as Reliance Nippon and GIC Re, investors have a chance to score handsome returns especially since the insurance industry is ripe for growth. Bitcoin has been a surprise package given the astronomical returns it has given but we are uncertain about the future of cryptocurrencies as an investment avenue since RBI and Chinese reserve bank has denied legality of cryptocurrencies. Having said that, one needs to closely watch important regulatory news coming out of the west.