In terms of investments, Kamat is not very active in managing his personal portfolio. It is being looked after by his younger brother Nikhil Kamath, who is also the co-founder of the stock trading platform. Nikhil Kamath also founded an alternative asset manager, True Beacon, in 2019 (Mint spoke to Nikhil about his portfolio in April 2022 and you can) Read about it.
Nitin Kamat says that the asset allocation and performance of his portfolio will be similar to that of his brother. The Kamath brothers maintain a diversified portfolio with investments in Equity (40%), Debt (40%) and Gold (20%). He has not done any valuation for his equity in Zerodha.
“If Zerodha were equity, the above numbers would have tilted towards equity in terms of asset mix,” Kamath said.
What is your investment philosophy? how will you allocate 100 among asset classes today?
I will be as aggressive as possible in equities, assuming that my worst case scenario is covered with a substantial cash balance in the bank.
I think India will become a super economic power in next 5-10 years with many good things in our favor like population, demographics, GDP growth. Of course, this journey will have its ups and downs, so I will reduce my investment.
Will you follow a proactive or passive approach?
I would rather do active stock-picking than a passive approach. My main qualification is in this field.
What are your thoughts on real estate?
Yield should be at least 4-5% for any asset class. This return is approximately 75% of the fixed deposit return (5.5-6.5%), given that the valuation of the asset under consideration will likely increase. But, this is not the case with real estate in India.
At the same time, I feel that for the country to do well, in the long run, we need to support entrepreneurs more than letting money get stuck in real estate and gold.
How do you choose a startup?
I am very excited about my investment through RainMatter, an initiative by Zerodha that funds and incubates innovative Indian fintech start-ups.
On the investments we pursue, the only return on investment (ROI) is that we are making an impact. So, in my mind all these investments are like CSR budget, thinking that it is all going to blow up. So, I don’t know if it actually technically qualifies as an investment.
How often do you check your personal portfolio?
Every time we do advance tax, we (brother) discuss our investments, but not on a granular level.
do you trade?
I haven’t taken a single trade (besides testing the platform) since 2010. But I still consider myself a good trader. I believe that many people think that trading is only about trading in stocks.
To me, it’s really trading your time and effort where the risk of reward is in your favor. And I feel, I am doing the biggest trade of my life with Zerodha which is the maximum result of my time and effort.
However, I am a pessimistic trader as I always try to take into account the worst possible outcome.
Do you have a Credit Card?
In the early 2000s, I spent around . took a credit card for 20,000 It took me five years to pay it off. By the time the loan closed, I think I paid four times the amount I borrowed including interest cost, late payment cost, etc. The first thing I did was discard that credit card as soon as I started earning enough money. After that, I didn’t have a credit card for about 10 years. I currently have one as it is useful while traveling abroad.
How did you pay for your first house?
We bought our first apartment in 2013-14 only when I had clarity about my cash flow. The investments I made in the house were actually only a small part of my financial situation at the time. I took a small home loan for this, but it was more about the tax-planning aspect and not the purchase of the house.
Do you have an emergency fund?
We keep enough funds – a risk-free allocation – that will ensure we have enough dry powder to regain our lives, even if we have to blow everything up and start all over again.
Do you have life insurance or health insurance?
I have only those life insurance policies in my name which my father had bought when I was young. With the emergency amount aside, I don’t really need to take myself a term insurance policy anymore. In terms of health, I do not have an individual policy, but I am covered by group health cover in Zerodha.
(Note to readers: Through this series, we attempt to highlight the basic principles of personal finance such as asset allocation, diversification and rebalancing. We do not suggest repeating Kamath’s asset allocation, as personal finance is individual-specific and varies from person to person.)