Devina Mehra, Founder & CMD, First Global, says Indians no longer need to rely solely on gold for currency investments. The Reserve Bank of India’s liberalised remittance scheme (LRS) offers a great opportunity. You can invest in various places around the world. The scheme is quite generous in terms of the amount you can send. Many Indians may not consider global investing seriously, often thinking it only means buying a few well-known US stocks or a Nasdaq ETF, but that’s not the full picture of global investing.
You have recently said that gold does not seem to be a particularly safe asset. If you take a look at gold versus Nifty, gold has by far outperformed Nifty on a year-to-date basis. What is your view on gold, especially when fundamentally so much is happening in terms of geopolitics? On the other side, the rupee is plunging. Would not that make gold more attractive compared to equities right now or would it be the other way around?
Devina Mehra: I would say that first of all always have an allocation to gold in your portfolio. But it cannot be a very high allocation because the data shows that gold has not been a safe asset in dollar terms. The early 80s price of gold has not been crossed. It went down 60% in the interim. From the next high, it went down 40%. So, that has happened. Gold has had drawdowns or losses which are just as high as any other equity class.
So, why does gold look so much better to us? Our grandmothers were not wrong in buying gold because gold at that time was the only currency hedge available. When I started working, the dollar was Rs 12, today it is 85-plus. So, there has been an 85% depreciation in the course of less than a career, and that is why the rupee chart of gold looks fine.
But the point is, now you do not have to hedge your currency bets only via gold. Now the liberalised remittance scheme (LRS) of the RBI, is very attractive. You can invest anywhere in the world. In terms of quantum, it is a fairly generous scheme. And this is a cause for me that Indians do not think of investing globally or they think investing globally means buying the five US stocks they have heard of or just buying a Nasdaq ETF, that is not global investing.
I have a product which invests all across the globe in all asset classes, which starts at only $10,000, that is like eight-and-a-half lakh rupees. Normally, in a private bank, you would not get it for less than a million dollars. Because Indians should diversify, you cannot look at 20-30-year gold and how I want to reach there without looking at currency, without looking at global diversification? One of your New Year resolutions should be global diversification because asset allocation only within a country is not good enough.
But Rs 12 against dollar, I do not even remember when that was. A long time ago perhaps. A multi-bagger. I hope you did buy some dollars at 12 when you started working.
Devina Mehra: That time, it was a criminal offense to buy dollars. Even
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