Some facts about India
- India’s GDP is $2 trillion(Ranked 10th in the world)
- Wealth in India is about $3.6 trillion
- Market cap of all the companies in India is $1 trillion
Average Indian’s love for real estate and gold
- Personal wealth in India is heavily skewed towards property and other real assets, which make up 86% of household assets
- We are in love with ..“all that glitters”….
- India represents 3% of world wealth ($3.6 trillion)
- India has 11% of worlds gold ($1 trillion)
- Wiki link
How do we compare with developed economies
- Citizens in developed economies have a diversified portfolio with significant (over 40%) investments in financial instruments.
- Investment in real estate is less than 50% of their overall wealth
Average Indian’s assets in financial products
- We love guaranteed returns so we have $100 bn in FD’s with banks
- We are over invested in debt products even through Mutual Funds !!!
- Mutual fund industry has 800,000 cr in AUM ($135 bn)
- About 57% of this is in debt funds, 22% in equities
- Even in Mutual funds retail investors have 20% and HNI’s have 28%
- KPMG report on Indian Mutual fund Industry
Where do HNI’s in India invest
- HNI’s have about 25% of there assets in real estate and 17% in equities, 16% in alternate investments
What is the investment profile of a global HNI
- Average HNI has 26% of wealth in equities and it is 37% in North America.
- Investments in real estate is about 20%
Who owns equities in India
- Promoters own 54% of all equities in India
- 30% is owned by Institutions (predominantly FII’s)
- Only 15% is owned by individuals (of this HNI’s represent a significant part)
- Average Indian has very little or no exposure to equities
Direct Equity Ownership Classification
What is the summary…
- Wealthier people have a greater portion of their assets in equities
- Average citizens in richer countries also have greater exposure to equities
Why
- Equities are productive assets and significantly outperform other asset classes in the long run
- US (S&P) market has returned an average of 10% per year for the last 80 years
- Nifty has been returning an average of 14% per year for the last 20 years
- India has a great growth story ahead and will continue to grow
What does this mean for me
- Equities provide tax free compounding and growth in wealth if one stays invested for long term
- Progressive Indian’s need to have at least 20% of their investments in equities to meet their long term objectives
Making markets and power of compounding work for you
- Relative returns with FD vs. equities (using the historical average rates of return in India)
- 1.4 times bank returns over a 5 year period
- 2.6 times bank return over a 15 year period
- 5 times bank return over a 25 year period
IndusWealth Advisors, is a SEBI registered Investment Adviser – registration number INA200016856