The Average Age Of Investors Is Declining: Nikhil Kamath Sticking to large-cap companies will be beneficial for investors in the long run, according to the co-founder of Zerodha and True Beacon

At any stage of life, it is crucial to assess financial wellness and wealth management. Financial preparedness is a must which can help withstand any kind of prolong interruption such as a job loss. To reflect over these aspects, Entrepreneur India interacted with Nikhil Kamath, co-founder and chief investment officer, True Beacon and Zerodha.

Wealth Management & Consumer Behaviour During the Pandemic

According to Kamath, investors have become aggressive and most of them are accessing the market directly. Interestingly, the average age of users on Zerodha platform has gone down to 32 over the past few months. The ticket size has been INR 80,000 to INR 1 lakh per user who joins the platform. Also, there has been a significant spurt in the number of users who are joining with growth being 100 per cent month-on-month during the pandemic.

Emerging Trends In Investments

It is not unknown that a lot of investors choose stocks influenced by SMSes they receive. They often get influenced to buy something which they might not have planned. Kamath claimed, "We vehemently suggest people not to fall for these." It is advisable for new users to stick to large-cap companies which have a track record. The benchmark Nifty index has returned 10-11 per cent per year in the span of two decades. Sticking to this group of 50 companies with significant market caps is a better option to consider. People with reasonable expectations can definitely achieve long-term returns.

Risk Aversion For Regular Investors

Generally, the regular investors have wise decision-making and get better outcome. But at the same time, some people fall for inadequately governed companies in the ecosystem. Kamath said wealthy investors are allocating capital to good quality stocks in order to achieve diversification on their portfolio. However, the ones who are medalling with penny stocks or related stuff will move to better quality company in a course of time. In terms of capital allocation, residential real estate gets a chunk of ones savings. It yields only 2 per cent returns.

But, this trend is changing as young investors are entering the market and the notion of traditional investment has changed. Significant allocation in the equity market is coming from people in 25-30 years age group.

True Beacon & Zerodha: The Differentiator Factor

Zerodha has scaled in an incredible manner by being the effective platform for investors. Organic growth has been the differentiator factor of Zerodha. Kamath recalled that the idea of starting True Beacon evolved when he reflected over allocation of money in one of the banks few years ago. After realizing the intricacies of the fund management associated to it, he decided to eliminate all these inefficiencies. This was followed by removing the middle men and defining client-aligned business model. True Beacon has performed in an exceptional manner by changing the approach of asset manager.

Ecosystem Resilience And Business Plans For 2021

COVID-19 has expedited prevalent trends in the industry and everybody will be online. Kamath remarked, "Everybody will use technology and it leads to the need to evolve and remain agile." Zerodha and True Beacon aims to evolve faster than competitors. He shared that after trading for 15 years, it is apparent that future of the market cannot be predicted. Tools are being worked on by the team of Zerodha to simplify the role of traditional financial planner.