The only wealth creation formula you need to survive a market with mood swings

Navneet Munot, MD and CEO, HDFC Asset Management, delivered a powerful message at the India Today Conclave 2024, sharing his tried-and-tested wealth creation formula: Sound investments, Time, and Patience (STP). While sharing his views, the veteran fund manager said that this simple approach has stood the test of time and will continue to do so for the coming years. “There’s no other formula,” he said. “STP is the key to long-term wealth creation.”

Munot’s personal investment journey, which began in the 1980s, serves as proof. Back then, the Sensex hovered at around 400 points; today, it has crossed 85,000. His takeaway for investors—stay disciplined and trust the process, as the long-term potential of the Indian market is undeniable.

The money manager also shared his insights on the evolving landscape of domestic equity markets, the financialisation of savings and the power of retail money driving economic growth. Munot highlighted that the financialisation of savings in India is at a nascent stage, yet it is a structural trend. He stressed the role of retail investors in transforming the market, pointing out that systematic investment plans (SIPs) have become a formidable force.

“With 10 crore SIP accounts and an average ticket size of Rs 2,300 per account, that translates to Rs 23,000 crore each month. This level of participation is unprecedented,” he said, noting that there hasn’t been a single financial year where foreign portfolio investors have matched that level of inflow.

“Markets will always have their ups and downs,” Munot added, cautioning against seeing markets as a quick profit opportunity, especially in speculative areas like SME IPOs. However, he remains optimistic about India’s long-term prospects, describing the current economic growth as “an unparalleled miracle in human history.”

Munot also talked about the broader evolution of India’s economic story, recounting how previous generations depended on foreign aid and investments, while today, Indians are investing in their own future. “We are in the Amrit Kaal. We are witnessing a transformation where retail investors, even those in remote villages, can participate in the country’s growth through small investments like Rs 500 a month,” he said.

On market volatility, Munot acknowledged the risks but reiterated his belief in long-term wealth creation. “Markets swing like a pendulum, and there are pockets of excesses that need correction. But over the next several years, this is India’s time.” He also praised Sebi for bringing attention to the fact that 93% of F&O traders lose money, reinforcing the importance of investing for the long term rather than treating the market like a speculative or entertainment platform.