Where Do Millionaires Invest? The Secret Sauce Of Wealthy Investors, According To Axis Bank's Krishnamurthy
To manage money well, investors need to get their goal setting and asset allocation right, Krishnamurthy says.
What sets the rich apart is the ability to manage their own money. And to manage it well, investors need to get their goals and asset allocation right, according to Axis Bank's Satheesh Krishnamurthy.
The science behind the pursuit of becoming rich begins with "getting your goal settings right", Krishnamurthy, executive vice president and head-private, premium banking and third-party products at Axis Bank Ltd., told BQ Prime’s Niraj Shah in the special series 'Where Do Millionaires Invest?'.
"Am I being too greedy? Am I being too conservative? Am I being overly aggressive or am I being too conservative? These are very important questions that need to be dwelled upon—especially with the richest—because bear in mind, I think it was Warren Buffett who said that you don't have to become rich twice."
Once one becomes rich, it's "very important to consolidate your position", he said.
"I think the secret sauce... is to get your asset allocation right. Very, very important because the amount of capital that you deploy to the six, hitting winners becomes very important. If you end up allotting very little to your multi-bagging ideas, chances are that you will get sub-optimal returns. So, it's very important, whatever is the goal that you have in mind as multimillionaires or somebody who wants to be in that position."
In terms of asset allocation, Krishnamurthy said that two-thirds of customers, who have $1-million-plus in financial assets, tend to be in fixed income.
"A portion of it also tends to be in fixed deposits, but it's fixed income. Obviously, you saw how interest rates have been behaving over the last two to three years. Some of those post-Covid were absolute black swan events," he said.
According to him, asset allocation on an average basis involves two-thirds invested in debt and the rest would be a mix of equity and some structured (options) as well.
"We will be nuanced depending on the size, because this again is a hugely divergent pool. There could be a customer with a $2-million corpus, and somebody with a $200-million corpus. They behave like chalk and cheese."