The world of mutual funds has witnessed remarkable success through disciplined investing, and Gajendra Kothari’s journey exemplifies how Systematic Investment Plans (SIPs) can build substantial wealth
over time.
Initially, Kothari squandered Rs 50 lakh in Futures and Options (F&O) trading, but once he understood the importance of SIPs, he began investing Rs 10,000 monthly. Astonishingly, his monthly SIP now surpasses Rs 40 lakh, making his story a beacon for mutual fund investors.
Kothari, who aims to have a Rs 3,000 crore portfolio by age 65, is the founder of Etica Wealth Capital.
His entry into mutual funds began in 2004 at age 24, when he joined UTI Mutual Fund after reaching Mumbai through campus placement. At that time, the mutual fund industry was valued at Rs 2-3 lakh crore, far smaller than today’s Rs 75 lakh crore.
Kothari initially had little knowledge of mutual funds, and the industry itself offered minimal awareness. Those around him doubted the potential of wealth creation through mutual funds. In his early years, he made several mistakes—investing in ELSS funds solely for tax savings without understanding the power of compounding. With a salary of just Rs 30,000, saving in Mumbai’s costly lifestyle was challenging, and even more so after marriage.
Lost Rs 50 Lakh In F&O Trading
He later got an opportunity to work in London, where his income grew significantly. However, he soon made the biggest mistake of his life, investing two years’ savings in F&O (Futures and Options) trading. When global markets crashed in 2008, he got caught in day-trading and leveraged positions, losing Rs 50 lakh, a huge sum at the time. The loss left him shocked and wary of the markets, but it taught him a vital lesson: disciplined investing, not speculation, is key.
Gajendra Kothari said in an interview, “This was the most valuable lesson of my life, though it cost me Rs 50 lakh.” This experience inspired him to start his own firm. While at UTI, he advised high-net-worth individuals (HNIs) and realized he could simplify investing for everyday investors. In 2009, despite the industry facing challenges after SEBI’s entry load ban, Gajendra launched Etica Wealth.
Small Investment, Big Dreams
His first SIP, started in August 2010, was Rs 10,000 monthly split between small cap funds and ELSS funds. His simple philosophy was, “If I’m advising clients to invest through SIPs, I should start with one myself.” When his daughter was born in December, he continued the SIP without interruption. He neither added nor withdrew funds and never missed an installment. Over 15 years, his total investment of Rs 18 lakh grew to Rs 86 lakh, with the small-cap fund delivering a CAGR of 21% and the ELSS fund a CAGR of 18%.
Kothari said, “This is the first SIP of my life, and I will never touch it. It will be my longest-term investment and teach me the most.” This SIP showcases the power of compounding: his first installment of Rs 5,000 has grown to Rs 55,000–60,000, nearly 11–12 times. He adds, “Imagine, in 30 years, each installment could reach Rs 7 lakh, over 140 times the original amount!”
During COVID-19 in 2020, his SIP returns were just 7% after 10 years, but he remained patient. Compared to a PPF yielding 7.1% guaranteed, his investment was delivering 18%, all tax-free, as he never sold any units.
SIP Growth: From Rs 10,000 To Rs 41 Lakh
Kothari gradually increased his SIP contributions, starting with Rs 10,000, then Rs 50,000, Rs 1 lakh, and by 2020, he was investing Rs 6–7 lakh per month. Today, his monthly SIP stands at Rs 41.2 lakh, amounting to nearly Rs 5 crore annually. Gajendra earned all this money through his job and business, what is known as active income, and consistently invested it into SIPs.
Kothari advises, “Focus on active income during the first 15 years, as that forms the foundation for investments. As you grow older, passive income from SIPs will surpass it.”
About 90% of his wealth came from SIPs, achieved automatically. Whether the market was at 85,000 or 80,000, his SIPs continued uninterrupted. “If it had been done manually, you might have missed payments or stopped investing,” he adds.
Current Size Of Gajendra Kothari’s Portfolio
Kothari’s portfolio today is valued at Rs 60 crore, built from scratch over 15 years. He reveals that 90% of his investments are in mid- and small-cap funds, yielding average returns of 17–18%. He avoids FDs, PPF, crypto, and direct stocks, despite holding a CFA and an MBA in Finance. Calling himself a “sleepy investor,” he says he prefers steady, disciplined investing over high-risk ventures.
Gajendra Kothari’s Investment Strategy
Kothari’s investment strategy takes a contrarian approach. He invests in underperforming sectors—for instance, putting Rs 20 lakh into China Tech when it dropped 50%, and another Rs 40 lakh when it fell 45%. Today, his portfolio enjoys a CAGR of around 23%.
His journey wasn’t easy. The 2008 crash wiped out much of his wealth, but he learned that markets are cyclical, and volatility creates opportunities. Even during COVID, when returns fell to 7%, he remained patient.
Kothari says, “The market gives you the returns you deserve. Staying disciplined is crucial. Investing is a mathematical game. The process must never be interrupted.”
Investment Tips For Everyday Investors
- Start Small: Begin with an initial investment of Rs 10,000, gradually increasing over time.
- Automation: SIPs work best when automated, reducing the need for constant decision-making.
- Patience: Investments should continue even during market downturns, with additional funds allocated when markets show recovery.
- Active Income: Growth in income provides the source for further investments.
- Tax Efficiency: Holding investments long-term helps save on taxes.
- Portfolio Management: Maintaining a portfolio of 5–6 well-chosen funds ensures better control and diversification.
