Finance Expert Dr Prasanna Chandra’s Simple Yet Effective Tips For First-Time Investors

By Saurabh Shukla

New Delhi: With more and more Indians entering the world of investing, the need for simple and practical financial advice has become more important than ever. Many persons who are investing for the first time often have similar questions like how to begin, where should one invest and how does one stay calm and disciplined when markets behave volatile?

In an exclusive conversation with ETV Bharat, finance expert Dr Prasanna Chandra, who happens to be the Director of Centre for Financial Management, Bangalore, addressed these very concerns, and shared helpful insights on how to build healthy financial habits, understand risks and build long-term wealth.

Dr Chandra explained some essential steps like starting with small amounts, saving regularly and picking investments that match one’s comfort with risk. He further emphasised the need to be patient, disciplined and always maintain a long-term perspective when it comes to money. During the conversation, he also spoke about his book ‘Mastering Personal Investments: 20 Steps to Financial Independence’, published by Bloomsbury.

Here are the excerpts from the interview.

ETB: You talk about 20 steps to financial independence. But for someone who is dealing with EMIs, rising costs or an uncertain job market, what does that really mean? And how do they even begin?

Prasanna Chandra: The first step, of course is to save and then gradually start investing. One can begin with small, achievable steps, like saving Rs 500 to Rs 1000 per month and automate transfers to one’s savings or investment accounts. Remember, financial independence is a journey and it is important to be patient and persistent.

ETB: These days there’s advice pouring in from influencers, YouTubers, and even friends on WhatsApp. How can someone figure out what is actually useful?

Prasanna Chandra: Figuring out what’s useful in the sea of investment advice can be overwhelming. To separate wheat from the chaff, look for guidance from credible sources. This book (mentioned above) provides the basic knowledge required by investors so that they can figure out the signal from the noise. It emphasises the importance of patience and discipline in investing, encouraging readers to adopt a long-term perspective.

ETB: A lot of young people are drawn towards earning fast-money through stock tips, crypto and trading. But your book leans toward long-term investing. Why do you think that slow-and-steady approach still works in today’s fast-moving world?

Prasanna Chandra: A long-term perspective is essential. Long-term investing allows you to harness the power of compounding and focuses on building wealth gradually rather than seeking quick gains. A slow and steady approach helps manage the risks by spreading investments across various asset classes and time horizons.

ETB: SEBI recently reported that most retail traders in derivatives end up losing money. Why do you think so many still try their luck. And what’s the one thing they really need to know before jumping in?

Prasanna Chandra: Investing requires patience and a long-term perspective, more so in our fast-moving world. Traders in short-term derivatives are speculating, which is a short-term zero-sum game that is tilted against them.

ETB: A lot of people feel like investing is not their cup of tea, and that it is too complicated or meant only for people with big salaries. What would you say to someone who feels s/he is already late or not ‘money-smart’ enough?

Prasanna Chandra: Investing is for everyone, especially for those who have modest income. It is about developing good habits like setting aside a portion of your income regularly. You need not be an expert to start investing but rather learn as you go and adjust the strategy over time. Don’t let feelings of inadequacy or lateness hold you back. Start small, be consistent, and focus on making progress. With time and patience, one can build a strong foundation to secure their financial future.

ETB: For someone earning their first paycheck or thinking about where to put their savings, what’s the one piece of advice you wish more people heard when they were just starting out?

Prasanna Chandra: Develop a savings habit. One should make it a priority by setting a portion of his/her salary/income regularly. They can put their money in a hybrid mutual fund that has an asset allocation that matches with their risk tolerance levels.

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