How Zerodha’s Nithin Kamath manages his personal finances


In terms of investments, Kamath is not very active in managing his personal portfolio. That is being taken care of by his younger brother, Nikhil Kamath, who is also a co-founder of the stock trading platform. Nikhil Kamath also founded True Beacon, an alternative assets manager in 2019. (Mint spoke to Nikhil in April 2022 about his portfolio and you can read about it.

Nithin Kamat says the asset allocation and performance of his portfolio would be similar to that of his brother. The Kamath brothers maintain a diversified portfolio with exposure to equity (40%), debt (40%) and gold (20%). They haven’t ascribed any valuation for their equity in Zerodha.

“If Zerodha was equity, then the above numbers in terms of asset mix will most likely be skewed towards equity,” said Kamath, who also spoke about the various asset classes and how he manages his personal finances. Edited excerpts from an interview:

What is your investment philosophy? How would you allocate 100 between asset classes today?

I would be as aggressive as possible in equity, assuming my worst-case situations are covered with a sufficient cash balance in the bank.

I think India will become a super economic power in the next 5-10 years with many good things in our favor such as the population, demographics, GDP growth. Of course, there will be volatility through this journey, hence I would stagger my investments.

Will you follow an active or passive approach?

I would do active stock-picking rather than the passive approach. My core competency is in this area.

What’s your take on real estate?

For any asset class, there should be a yield of at least 4-5%. This yield is about 75% of fixed deposit returns (5.5-6.5%), considering that there would be a potential upside in the valuation of the asset in question. But, that’s not the case with real estate in India.

Also, I think for the country to do well, in the long run, we need to be backing entrepreneurs more than letting the money get stuck in real estate and gold.

How do you pick start-ups?

I am very passionate about our investments through Rainmatter, an initiative by Zerodha that funds and incubates innovative Indian fintech start-ups.

The only return on investment (ROI) on those investments we chase is that we are creating an impact. So, all these investments in my head are like a CSR budget, thinking that it’s all going to blow up. So, I don’t know if it really qualifies technically as investments.

How often do you check your personal portfolio?

Every time we do advance taxes, we (brothers) discuss our investments but not at a granular level.

Do you trade?

I have not taken a single trade after 2010 (except to test the platform). But I still consider myself a good trader. I believe that a lot of people think that trading is just about trading in stocks.

For me, it is really trading your time and effort where the risk to reward is in your favour. And I think, I am in the biggest trade of my life with Zerodha, which is the maximum outcome for my time and effort.

I am, however, a pessimistic trader since I always try to factor in the worst possible outcome.

Do you have a credit card?

In the early 2000s, I took a credit card to pay my GMAT fee of about 20,000. It took me five years to repay it. By the time the loan was closed, I think I paid four times the borrowed amount including interest costs, delayed payment costs, etc. As soon as I started making enough money, the first thing I did was to discard that credit card. After that, I didn’t have a credit card for almost 10 years. I do have one currently since it is useful while traveling abroad.

How did you pay for your first house?

We bought our first apartment in 2013-14 only once I had clarity about my cash flows. The investment I did in the house was really a small portion of what my financial position was at that point. I took a small home loan for this, but it was more from a tax-planning aspect than to fund the purchase of the home.

Do you have an emergency corpus?

We keep enough corpus—a risk-free allocation—that will ensure that we have sufficient dry powder to regain our lives even if we were to blow up everything and had to start all over again.

Do you have life insurance or health insurance?

The only life insurance policies in my name are the ones that were bought by my father when I was young. With the emergency corpus aside, I don’t really need to go get myself a term insurance policy now. In terms of health, I don’t have an individual policy, but I am covered by the group health cover we have at Zerodha.

(Note to readers: Through this series, we try to highlight the basic tenets of personal finance such as asset allocation, diversification, and rebalancing. We do not suggest replicating the asset allocation of Kamath, as personal finance is individual-specific and differs from one person to another.)

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