Despite three decades of education on concepts like compounding and time in the market, investor behavior has remained largely unchanged over the past 25-30 years. In her interaction with host Vivek Law on the Simple Hai! Podcast, Roopa Venkatkrishnan stressed that altering human behavior takes significant time. A critical barrier to success is fear, which often halts growth. Individuals need mentors and hand-holding to achieve balance and confidence, accepting that if they fall, they will rise again.
Drawing on observations about the subconscious mind,Venkatkrishnan noted that 75% of human thoughts are negative, yet people tend to concentrate on these, forgetting the positive 25%. This negativity manifests in investing, where the first question clients often pose is, "Is my money going to be lost?". She advocated for optimism in life and investing. Volatility, often perceived negatively, is natural like an ECG machine fluctuating, problems will always arise, but solutions follow, she opined.
India at an Inflection Point for Wealth
Venkatkrishnan holds a strong optimistic outlook for the nation, believing that a lot more wealth will be created in India over the next 15-20 years. She emphasised that India has reached a different trajectory, boasting brilliant entrepreneurs, strong internal consumption, and a young, aspirational population.
Affluence brings comfort and increases risk-taking ability. Having a well-saved corpus eliminates fear, giving individuals the ability to take risks in their careers, such as changing jobs. Money profoundly changes people’s thought processes, comfort, and behavior. Crucially, she asserted that escaping poverty only requires 10 years if one commits to a consistent SIP of even small amounts, such as ₹500 to ₹1,000.
While the mutual fund industry has created "humungous" wealth over 30 years, with some NAVs rising from ₹10 to ₹4,000, few people have truly experienced this because fund returns and folio returns are different. Investors must stay invested long-term to gain compounding returns. She advises investors to maintain a positive outlook and temper return expectations, projecting 12-14% returns from equity. Investors must be prepared for market corrections of 30-50% that may occur multiple times over 20-30 years.
The Discipline of Money Management and Financial Coaching
The increase in the use of technology and easy access to credit, such as the rampant use of EMI, as seen in reports of young people buying expensive items they cannot afford, has led to many falling into debt traps. Venkatkrishnan identifies the main issue as money management.
To live well, individuals must develop financial discipline, she told Law. She suggested allocating earnings where 20% goes into savings, 50% to immediate expenses, and the remaining 30% saved for discretionary purchases like saving monthly for a planned iPhone purchase next year. She noted that mistakes occur because people fail to buffer their money for short-term, medium-term, long-term, and immediate needs.
A significant behavioral change needed in Indian society is overcoming the taboo surrounding money discussions. Our parents rarely discussed money at the dining table. Just as people hire coaches for sports, singing, or dancing, they should hire a financial coach for financial assistance, regardless of the amount they wish to invest. The change must start with individual mindsets, allowing the entire Indian community to achieve financial literacy and independence.
A Personal Journey: From Scarcity to Financial Advocacy
Venkatkrishnan's journey, which led her to become one of the country's most respected financial planners, was driven by powerful personal experiences . After feeling bored in her initial career days around 1989, she joined the financial services industry as a secretary at Times Guarantee Financials.
A pivotal moment in her life was when her father, having funded her education, refused to give her a job, urging her to find one herself. This rejection, though initially painful, leading her to cry for 8 hours, led her to declare, "I will never ask anyone anything". Her first job paid only ₹300 at a petrol pump. She experienced hunger, realising that after oxygen, "the next thing people need is hunger and for hunger you need money". This early struggle made money a very critical aspect of her life and taught her resilience, balance, patience, and the ability to digest failure.
She adopted a grounded principle that mutual funds are one of the best vehicles for anyone who doesn't understand stock markets, allowing even small amounts to be allocated. Her life goal became ensuring that those who come into contact with her do not "die poor," as that pain is familiar to her.
