10-15% in gold, worried about inflation': Zerodha's Nithin Kamath on family's asset allocation

I get trolled for saying this, but I can't believe why real estate is so expensive in this country," Zerodha founder Nithin Kamath said

During a discussion with Shekhar Tomar, Assistant Professor of Economics and Public Policy at the Indian School of Business (ISB), Nithin Kamath of Zerodha disclosed that his family has allocated 10-15% of their investments in gold due to concerns about inflation. While expressing skepticism about land as an asset class, Kamath endorsed gold as a more favorable investment avenue.

 Nithin Kamath, co-founder of the stock broking platform Zerodha, expressed his views on gold and land as investment assets. He emphasized gold as a viable asset class in an inflationary environment, clarifying that he refers to gold as an investment, not jewelry. Kamath disclosed that his family allocates 10 to 15% of their investments in gold due to concerns about inflation.

On the other hand, Kamath holds contrarian views regarding land. Despite acknowledging the prevalent high prices of real estate in the country, he questions the valuation of land. Kamath pointed out the disconnect between the perceived value of land and its actual yield, particularly in rural areas where farmers may overestimate the value of their land relative to its income-generating potential. This discrepancy leads to inefficient land use practices, which Kamath finds problematic.

Nithin Kamath shared an incident involving his non-profit Rainmatter Foundation, which supports environmental initiatives. The foundation aimed to purchase land adjacent to a forest in Krishnagiri to prevent a villa project from progressing. However, they encountered challenges as the seller demanded an exorbitant price.

Kamath highlighted the widespread issue of land valuation discrepancies. He recounted the foundation's initial project in Krishnagiri, approximately 60-70 kilometers from Bengaluru, involving a 100-acre parcel of land. A builder intended to develop it into a villa community, prompting the foundation to intervene to protect the adjacent forest. Despite their efforts, they faced resistance from the seller, who insisted on an unreasonable price. This experience underscored the complexities and obstacles associated with land transactions and conservation efforts.

Nithin Kamath expressed his skepticism towards the inflated prices of land in seemingly remote areas. He questioned the rationale behind exorbitant valuations, emphasizing the absence of tangible returns or yield from such land.

Kamath likened land ownership to owning shares in a company, highlighting the necessity for returns or dividends. He emphasized the importance of investments generating income or providing value over time. While acknowledging the significance of owning property for personal use and peace of mind, Kamath expressed reservations about land as a purely speculative investment vehicle, particularly from an investor's perspective.