Investors: 'Focus On Income, Not Stocks'

'For the initial decade, I consistently advise young professionals to prioritise career development and income growth rather than market analysis.'

As Indian equity markets navigate uncertain terrain entering 2026, Vivek Sharma, Smallcase Manager and Investment Head at Estee Advisors, shares a practical approach to wealth creation.

In the first part of this interview with Prasanna D Zore/Rediff, Sharma shatters some conventional investment anxieties, arguing that disciplined SIPs matter far more than market timing.

If someone is commencing their investment journey fresh in 2026, what should be their initial investment strategy and why?

Rather than recommending a single investment vehicle, I advocate three simultaneous investments.

First, select a debt fund from a reputable institution -- don't expend excessive time deliberating which specific fund.

Second, choose a hybrid fund providing exposure to both equity and debt.

Third, select an equity fund, whether large-cap or multi-cap.

The paramount objective is cultivating the habit of systematic monthly saving and investing. This discipline proves far more valuable than selecting the optimal fund.

Over one year, this approach provides excellent exposure to three broad asset classes: debt represents the safest option, equity the riskiest, and hybrid funds occupy the middle ground.

Monitor performance to develop an understanding of volatility, and adhere to your investment plan for the full year before conducting any review.

Once investors have developed familiarity with mutual fund investing after the initial year, how should they approach investments from the second year onwards?

After one year of analysing these funds and observing your reactions to volatility, you'll develop considerable insight into your risk appetite. This becomes the appropriate stage to plan about asset allocation more seriously -- determining your comfortable level of equity exposure versus debt allocation.

Consider this: During the recent period, international funds delivered returns ranging from 20% to 30%, while India generated approximately 5%. This demonstrates that you can err in product selection, yet if your asset allocation proves sound, you'll still perform admirably.

Therefore, I advocate a top-down approach. Don't attempt to master stock picking initially. Focus on asset allocation, risk profiling, and increasing your savings capacity. Don't expend excessive time learning about investments during your first five to ten years.

Your time should be devoted to increasing your income. For the initial decade, I consistently advise young professionals to prioritise career development and income growth rather than market analysis.

For beginners in their first year, what level of systematic investment plan contribution would you recommend?

I recommend saving (and investing) whatever proves feasible. Circumstances vary dramatically. An investor residing with parents in a tier-two city, working remotely, might easily save 80% to 90% of their income, while others struggle to save even 10%.

However, I would suggest that saving 20% to 30% represents a commendable starting point. For those unable to save even 10% initially, I counsel against undue concern.

Focus on career advancement, and in subsequent years, opportunities will arise to save more aggressively.

With markets at record highs, is it still prudent for modest investors to allocate funds to equities through mutual funds in 2026?

If your asset allocation proves appropriate, concerns about market levels become less relevant. There's a renowned saying: What matters is time in the market, not timing the market. If we're contemplating valuations and peak levels, we're adopting an excessively short-term perspective.

Markets consistently reach all-time highs and continue ascending. Ten years ago, markets traded at roughly one-third of current levels. The general principle suggests that with markets historically growing at approximately 12% annually, they triple every decade.

Over ten years, expected return ranges narrow to approximately 10% to 15%. Markets should reach approximately 75,000 in the next decade.

Therefore, don't concern yourself with current levels. Over the long term, if you continue investing systematically, current market levels prove largely irrelevant.

Monthly investments over the next decade will average out effectively. You shouldn't worry about investing at the peak.

For individuals who don't monitor markets daily, are mutual funds still the safest investment avenue?

If individuals aren't tracking markets daily, I believe they'll perform remarkably well in their investments.

Mutual funds represent the optimal approach. You're paying a modest fee to professional investors who manage your capital with dedicated research teams.

If you're not monitoring markets daily, that proves a significant advantage. Research demonstrates that investors who invested and essentially forgot about their investments performed remarkably well.

We become our own worst enemies when we attempt to time markets and identify trends.

If you review your portfolio once monthly, that proves entirely sufficient. Even quarterly reviews suffice. The regulatory framework proves exceptionally robust -- your capital remains secure.

For the initial five to ten years, instead of daily market monitoring, invest that time in your career, upskilling, or focusing intensively on your profession.

Beyond systematic investment plans (SIPs) in 2026, would you recommend alternative investment avenues?

For retail investors, SIPs (systematic investment plans) prove relatively straightforward to execute and demonstrably effective -- amongst the finest strategies available.

However, one discipline is essential: Annual portfolio rebalancing.

Suppose you follow a 70:30 portfolio (meaning 70% of your money is invested in equity such as shares or equity mutual funds, and 30% in safer instruments like debt funds or bonds).

If equity markets correct, your equity portion may fall to 60%, while debt rises to 40% (not because you added debt, but because equity values dropped).

At that point, shift 10% from debt to equity (buy equity when it is cheaper) to restore the 70:30 balance.

Conversely, if equity markets rally sharply, your allocation may rise to 80:20 (equity values have grown faster than debt). In that case, move 10% from equity to debt (book profits in stocks and add safety by increasing the debt component) to return to your original allocation.

This mechanism ensures you're selling at bull market peaks, booking profits, while purchasing when markets correct. This represents one of the most effective market timing strategies.

For someone earning Rs 50,000 to Rs 75,000 monthly, what should constitute a sensible investment mix?

Irrespective of earnings, certain fundamental principles apply. Search online for a risk profiling survey -- you'll find questionnaires with approximately 10 to 15 simple questions. You can complete such a survey in five minutes. It provides a reasonably accurate indication of your risk profile and broadly guides appropriate asset allocation.

If your risk appetite proves high, it recommends higher equity allocation. It also considers age and similar factors. Therefore, utilise a risk profiling survey to ascertain appropriate asset allocation.

Irrespective of whether earnings total Rs 50,000 or Rs 2 lakh, invest according to your risk profile.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.