SIP vs Mercedes: What Zerodha CEO Nithin Kamath has to say

The Zerodha boss wrote on Twitter that a savings mindset will come in handy at a time when rising interest rates threaten to obliterate economies whose debt-to-GDP ratio is very high.

“A saving mindset is what will help us in times like now when countries that have borrowed heavily are getting screwed? In a world of rising interest rates, this will probably get much worse before it gets better for them,” the Zerodha founder stated.

Kamath’s response was directed to Iyer’s statement where he said that if the money saved for SIP was diverted toward the luxury car market, the business would improve tremendously.

“While the luxury car industry is growing at one of its fastest paces post-pandemic, actual sales are a far cry from potential and wealth that India carries,” Iyer told the ToI.

Iyer told ToI that unlike the West, India has a strong savings mindset owing to weaker social security measures and Indians end up savings for themselves and their kids.

“While there are 15,000 people inquiring about luxury cars every month, the actual order size is about 1500 units. So, there are still 13,500 customers who desire to own a Mercedes-Benz, but postpone their purchase thinking that its fine, maybe, I should continue (with) my SIP or maybe the next dip (in markets) is there,” he added.

“This is unlike the West, where you save for yourself to the maximum extent. The ₹50,000 that a potential customer invests into a SIP, if diverted towards the luxury car market will see business explode,” Iyer further stated.

In another tweet, Kamath added, “Isn’t slow & steady growth much better (like compounding in investing) than debt-fuelled explosive growth where people borrow to buy depreciating assets? Neither good for customers nor for businesses in the long run. Btw, I hope this is a misquote & is not what it reads.”

Apart from Kamath, Iyer’s remark has also received a reaction from MD and CEO of Edelweiss Group, Radhika Gupta.