Saurish Basu, IIM Lucknow Age: 23 Studying: MBA Investment corpus: Rs 4 lakh Corpus growth since start: 35% “I want to beat the returns of an equity diversified fund this year. It is a challenge that drives me”

Rajat Devgan, ICFAI Business School, Gurgaon Age: 25 Studying: MBA Investment corpus: Rs 2 lakh Corpus growth since start: 100% “My parents did not invest in equities. It was my curriculum that introduced me to the high-return potential of this asset class”

Murtaza Somjee, NUJS, Kolkata Age: 23 Studying: Law Corpus growth since start: 80% “I once bought a stock on a hot tip and lost 30%. Since then, I rely only on my own analysis”

The Harshad Mehta scandal had put my parents off equity investments. I offered to manage their portfolio, which had been untouched for a very long time. They agreed,” says Murtaza Somjee. He was 19 then. Today, at 23, Somjee is a law student at the National University of Juridical Sciences, Kolkata.

And his parents? “Their portfolio has grown by 80-90% since I began managing it,” says Somjee. Across the country, teenagers and young adults who are still in school or college are confidently taking care of their own finances— and sometimes those of their parents as well. Some of them started out really early. Gaurav Sarayan was 13 when he used to watch Bazaar Buzz, a late-night television programme about the news from the stock markets.

Now 23 and a seasoned investor, Sarayan is pursuing an MBA at IIM Lucknow. “In a period of five years, my investments have grown from Rs 1.5 lakh to nearly Rs 10 lakh,” he says. This phenomenal growth is not because of lucky buys; it’s been hard work. “I invest in stocks after studying the industry performance, current price evaluations, operating margins of the company and future projections,” says Sarayan.

The investment strategies followed by these students seem even more stunning when you consider the fact that most people twice their age are unable to even make a distinction between saving and investing. Sarayan claims that “technical analysis is not really important. The movement of stock prices need not always follow what such analysis predicts”. Instead, he suggests that investors try to correlate events in the industry with stock prices.

“Once you get the hang of this, everything is easy,” he says. One advantage that youth like Sarayan have over their parents’ generation is the fact that investing is a trend among students today. It started at the premier business schools, but is not confined to them any more. For instance, 21-year-old Nischala Agnihotri started investing when she was studying for her B Com degree at St Frances College, Hyderabad. 

Saurish Basu, 23, studying at IIM Lucknow, says investing is “like doing practicals of the theory lessons”. The beauty of starting young is that there’s always time to learn. Sarayan’s first investment was in Satyam Computers. “I sold it for a profit of 15%. At that time I did not understand the concept of longterm investments,” he says. But he was quick to learn. He now plans to hold on to his investments for a longer time.

Then there’s 29-year old Manish Bhagat, an alumnus of IIM Indore, now working with IBM. “When I was in college, I invested heavily in direct equities, especially small- and mid-cap stocks. But once I started working, it was difficult to devote so much time to my portfolio,” he says. Bhagat realised that equity diversified mutual funds were his best option, and so tweaked his strategy to focus on mutual funds. Students generally eschew mutual funds and focus on direct equities, giving rise to the general perception that youngsters who invest while studying are extremely aggressive.

But Basu claims that it is not such a bad thing: “I have only lost money once—Rs 40,000 in two days. But I learnt my lesson. Since then I always have a blue chip in my portfolio to balance an adventurous bet on a small-cap stock.” Basu has calculated his future monetary needs with commendable precision.

He reckons that Rs 1 lakh invested every year for 10 years at a modest 8% annualised return will generate income of Rs 1 lakh from the eleventh year onwards. “Part of this Rs 1 lakh can be re-invested every year and the cycle will be self sustaining,” he says. By investing his pocket money, Basu is already on course to this goal. In fact, his financial success made his parents give him their savings for investing.

Some parents hand over their portfolios to their children; others, like 25-year-old Rajat Devgan’s parents, begin to take an interest in equity investing. Devgan’s parents had never invested in equities but he learnt about wealth creation from his friends, the media and of course his curriculum (he’s an MBA student at ICFAI, Gurgaon).

His first investment was in the NTPC IPO, where he booked profits quickly to get 15% returns. “I thought it was a huge profit,” laughs Devgan. Since then, his portfolio has given approximately 60% returns and he is looking for richer rewards in future. “I target a specific growth percentage for a few stocks. But, primarily, everything is for the long term.”

Early bird advantage

Starting young can be rewarding. Take a look at these figures:

Rs 1,000 invested every month in a mutual fund at 15% annualised returns will grow to
Rs 65,228 for engineering students in 4 years
Rs 45,116 for graduates in 3 years
Rs 88,575 for medical students in 5 years
Rs 27,788 for MBA students in 2 years