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Bajaj Capital MD Rajiv Bajaj on what financial literacy means for investors

Bajaj Capital MD Rajiv Bajaj on what financial literacy means for investors

Rajiv Bajaj, vice chairman and managing director, Bajaj Capital, speaks on what financial literacy means for investors.

Bajaj Capital Vice-chairman and MD Rajiv Bajaj Bajaj Capital Vice-chairman and MD Rajiv Bajaj
Rajiv Bajaj, vice chairman and managing director, Bajaj Capital, speaks on what financial literacy means for investors.

Q. What should people know to be called financially literate?
A. They must understand the difference between saving and investing. They should know their financial goals and understand that there are several products to achieve these goals comfortably. So, if they become investors and do not remain just savers, the road towards achieving the goals will be much more comfortable.

Another important thing is losing the fear of investing. There is a certain fear due to lack of knowledge. The process of financial literacy involves overcoming that fear and replacing it by confidence through knowledge.

Q. How is understanding different risks important?
A. The biggest lesson of financial literacy is that risk won't go away. You have to manage the risk. The moment you realise that, you will be considered a knowledgeable investor. All asset classes-equity, bonds and real estate-have risks and the entire process of financial planning involves managing the different types of risk.

Q. One mistake that investors commit is expecting unrealistic returns from asset classes such as equity, real estate or gold...
A. We sometime pay too much importance to best and worst performances in particular schemes or category of schemes and base our investment decision on these performances. This is the biggest mistake. We have to base our decisions on averages and try to earn above-average returns.

Q. Are financial awareness campaigns of any help?
A. Investors are interested in knowing the basic financial concepts such as power of compounding, benefits of equity investment, etc. These are significant learning points which investors can pick up. For that, you need face-to-face contacts.

Published on: Feb 06, 2013, 12:00 AM IST
Posted by: Gaytri Madhura, Feb 06, 2013, 12:00 AM IST