Serial entrepreneur to mutual CEO, Varun Gupta on his investment journey

Financial planning and a disciplined savings plan are key to a secure future and peaceful retirement years. The process involves a timely start, strategic decision-making, discipline, and wise investments. In the latest episode of Let’s Mint Money, presented in collaboration with Groww Mutual Fund, Varun Gupta, Chief Executive Officer (CEO) at Groww MF offered Editor (Personal Finance) at Mint, Neil Borate, his roadmap for financial success. He spoke about where he invests his own money, how he has evolved as an investor, and his take on some of the big questions every investor faces – like the rent vs buy debate, planning for the kids’ future, and retirement goals.

Starting out

Gupta completed his engineering degree from the Indian Institute of Technology (IIT), Madras, and always wanted to be an entrepreneur. He hails from a large business family based in Ujjain and while his family expected him to get a ‘high-paying job’ after he graduated from IIT, he had other plans. He knew he had limited years to take risks before he started a family of his own as his parents didn’t need him to support them financially. Watch the full episode here,

While he was very young when he started his entrepreneurial journey, what worked in his favour was that he was very good with data and technology and he could bring value to the table on these fronts. He spoke to Borate about early challenges and said: “We were quite young and we were talking to CEOs, so it was difficult. But, over a period of time, because we were bringing in something which was completely new to India – analytics service for Indian companies in the FMCG sector was quite new, people saw value in it and that company did well.”

By 2015, Gupta was ready to move on and look at a consumer tech start-up and was one of the early birds trying to distribute mutual funds online. In 2019, that start-up was acquired by Groww and he moved along with it. But, the entrepreneur in him has stayed alive as he has set up several verticals from scratch, such as mutual fund distribution, an AMC, etc.

Investing for self

When asked how his professional journey has shaped his personal investments, Gupta called himself ‘undisciplined’ to start with – something that he does not recommend young people to follow. “I started investing in a disciplined way in the markets only in 2019, which is nine years after graduation. That is one regret I have. I advise young investors to start investing very early because compounding happens only after you have accumulated a certain corpus,” he said.

He learned from his mistakes and has started Systematic Investment Plans (SIPs) over the last 4-5 years. Gupta felt that 2014 would have been the right time to enter financial markets but one wrong investment choice got him stuck as he was left with no surplus funds to invest.

Golden words of advice

The right way to invest, according to him, is in equities via SIPs. For those who have a lump sum amount to invest can look at STPs from debt to equity. Mutual fund investors don’t need to time the market. Commenting on his own investments, he said his ideal portfolio would have about 70 per cent in equities, another 10-15 per cent in debt, 10 per cent in gold, and 5 per cent in some kind of international investments or bonds. He has recently bought a home for his family to live in and that has altered his allocation. So, the real estate allocation aside, mutual funds would account for about 90-95 per cent of his total portfolio.

Given that he has floated so many start-ups, does he invest in them too? “I have invested in about three start-ups as an angel investor. But, again, because I have made a big financial decision to buy a home, right now I am not doing it actively. I would like to start back again within the next year. It is a risky proposition so I will not keep more than 5 per cent of my assets there. I have met a lot of angel investors who never got to see their money back. For that, you have to really diversify and invest in at least 20-25 start-ups, because that is the probability of start-ups succeeding,” he said.

His investments have done well for him with an overall CAGR of 17-18 per cent from 2019 till date. A major contributor to this was the equity bull run. “Investing is 70 per cent about discipline and 30 per cent about where you are investing. So, I try to invest in a very disciplined way in the market, where, as soon as my salary comes, most of it goes to SIPs which rebalance after one year,” he further said.

Answering key investor questions

Gupta calls himself a core mutual fund investor as he feels that fund managers are much better positioned to generate alpha and manage their funds, as compared to what you can do yourself.

“What I have started doing now, which I think might be suitable for a lot of investors, is that I have managed a core portfolio where I keep only diversified funds. In addition to that, I have started maintaining satellite portfolios, where I take bets on some very specific themes. For example, EVs are a very big trend where there is a fundamental change that is going to happen in the way people travel. So, EV is a part of my satellite portfolio,” he said.

Another question on every investor’s mind is how much risk is good to take. On this, Gupta termed himself as a ‘moderate risk’ investor and said he invests more in multi-cap and flexi cap funds. He also has some allocation in small cap funds, which is an ongoing one. He has not changed his allocation strategy despite a massive mid and small-cap rally in the past couple of years.

He also delved into the buy vs rent debate on real estate investments and said real estate should only be bought for living, not for investment. Contrary to popular perception, he feels that a dream house should be bought on 80 per cent down payment and 20 per cent loan, and not the other way round, so that your liquidity stays. “I would say that buying a home was not an emotional decision. It was a very practical decision. Earlier, I used to buy a home for investing, which was very foolish of me. But now, I have two boys – aged seven and one year, and I want them to have a stable life. I got a good deal so I bought it with a purpose to reside there,” he said.