Some facts about India

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)

growth Where do HNI’s in India invest

breakdown

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%

breakdownhnwi

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

direct


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


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

makingmarket

 


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