If you are under 30, allocate 80% to equity and zero in real estate: Feroze Azeez
Feroze Azeez, Deputy CEO, Anand Rathi Financial Service, says, “there should be no real estate investment. Debt could be 10%, 20%, 30% and 60%, 70% equity. India will do very well for the next 10 years.
You will find portfolios which do not do well. And there are portfolios which will do well. What will distinguish them is the courage to have an asset allocation geared towards the growth asset of equity.”Want to understand from you how the power of compounding works wonders and if one has to get all the benefits, then how early should one start?Power of compounding is a very important tool and that is rightly called the eighth wonder of the world.
Having said that, I think in an Indian household, the problem does not lie in not starting early because we as a society have always saved a lot more than the most emerged economies. Like in the US, people take loans for a holiday which has an EMI of seven-eight years. Indians are great savers.
Our problem lies in starting early with equity investments. Ten years ago, the household savings in India was Rs 270 lakh crore. In about 10 years, the household savings has risen to Rs 670 lakh crore.
It is not just about saving, it is about investing right. Today, we have just about 7% invested in equity mutual funds out of the financial assets. Out of the total assets, we have just 4%.
We have more money in currency or savings accounts and current accounts than we have in equity mutual funds. So, the first point I am trying to make is that compounding works beautifully in equity, not in debt as much. Let me give you an example.
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