Nikhil Kamath of Zerodha tells where to put your money, and it’s not equity

When it comes to investing in current market conditions Nikhil Kamath, founder of Zerodha and True Beacon, believes in investing in fixed income and gold, as the equity market seems overpriced today. 

“I believe that the asset classes are overpriced today. So, my exposure to gold and fixed income is high, and together they make as much as 65 per cent of the portfolio. The idea is to wait for some correction to come about, during which I hope to increase my equity allocation in the following years. I’m still a big proponent of equity investing, and it is as low as it is today because of the current valuations,” Kamath told Business Today. 

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He clearly believes in the diversification of his portfolio, which is currently a combination of Equity, Fixed-income, Debt, Gold, and Real Estate. “Equity is about 40 per cent, debt is about 45 per cent, gold is 10 per cent, and real estate and alternatives together constitute the remaining 5 per cent. With time, as the valuations become less expensive, I would look to increase my equity exposure - having a higher equity allocation makes sense, given the tax advantage, power of compounding," said Kamath.

When asked what are the themes to watch out for in the next ten years, Kamath mentioned energy transition. "As we are moving towards more efficient sources of energy, everything from green hydrogen to renewables, and geo-engineering and climate-tech will be quite large as a space in the next ten years, with many large companies forming in the sector," he said.  

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Kamath also mentioned the money mistakes investors must avoid. “Planning and investing for the short-term while not paying heat to how macro winds change and not acting fast enough - many times, you feel like you should change a certain thing in your portfolio but don’t act quickly enough,” he said.

Interestingly, he reinvests 99 per cent of what he earns and spends a small portion of 1 per cent or less.

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