3 myths to remove if you want to grow your money – Ace investor Nilesh Shah’s mantra

Market expert Nilesh Shah, in a recent discussion on ET Now, shared his expert guidance on how to achieve financial independence through prudent and disciplined investing. Shah emphasized the importance of strategic investment choices and debunked three common myths that often mislead investors.

Myth 1: Currency notes can’t grow over time

Shah began by addressing a prevalent misconception among Indian households: the belief that currency notes, when kept at home, will grow in value. . “please please please all Indians be aware that currency note cannot grow it only depreciates to inflation please get freedom from that myth that currency will grow at home,” Shah emphatically. He pointed out that between FY21 and FY23, while Indian households invested Rs 4 lakh crore in mutual funds and Rs 2 lakh crore in equities, an astonishing Rs 9 lakh crore was held in currency. Shah stressed that this behaviour is counterproductive to wealth accumulation, urging Indians to move away from hoarding cash and instead invest in assets that generate real returns.

Myth 2: Wealth without risk

Another myth Shah debunked was the idea that one can become wealthy without taking risks. He highlighted that only 7% of household savings between FY21 and FY23 were invested in real return products like mutual funds, bonds, debentures, and equities. In contrast, 93% of savings were allocated to low-yielding assets such as currency notes, deposits, insurance, and small savings schemes. Shah warned, “How can you become wealthy with that kind of asset allocation where 93% of your savings are not going to deliver real returns?” He acknowledged the complexity and fear associated with investing in riskier assets but emphasized that avoiding them limits wealth growth.

Myth 3: one decision can impact it all

For the third myth Shah started by saying how reinforcing one decision can impact you when we all start our career. He also illustrated the long-term impact of investment decisions by comparing the returns from Public Provident Fund (PPF) accounts with Equity-Linked Savings Schemes (ELSS). He explained that investing Rs 12,500 monthly in a PPF over 25 years would grow to about Rs 1.07 crore, which is tax-free. However, the same investment in an ELSS could grow to approximately Rs 4.4 crore, even after taxes. Shah emphasized, “Just one decision of going for risk versus not going for risk creates such a big gap.”

Shah concluded by advising investors to make regular investments, stay disciplined, and avoid putting all their eggs in one basket. He recommended a diversified portfolio, including debt, equity, real estate, and commodities, to balance risk and return. “Regular investments, like little drops of water, will make an ocean. Be a disciplined, long-term investor,” Shah urged, encouraging Indians to achieve financial freedom through consistent and informed investment choices.