I have been accumulating some random news that I found interesting over the past few weeks. So thought I’d share my views on them. On the one hand, Indian government is coming up with a bill that may ban or regulate cryptocurrencies and on the other hand we have a major bank announcing that they are embracing cryptocurrencies. Both of these happened on the same day! What contrasting news. Then, one news article mentions very HNIs are not investing much in mutual funds while another one mentions a lot of interest in equities from them. That is not very contrasting because one mentions mutual funds, and the other direct equities, but still it is interesting.

Cryptocurrencies bill

Did you read the news that you could land in jail and pay a fine of up to Rs. 20 crore if you are found guilty of violating government rules on crypto finance? We are not really sure about the rules yet though. Meanwhile we hear the news that Kotak wants to be the 1st major Indian bank to embrace crypto with WazirX partnership. Now which way should we go?

While I don’t know which way the bill will go and as I already mentioned in one of my previous article, I have no opinion on cryptocurrencies. Good or bad it is here to stay. I am not investing because I have no understanding of the value of this asset. If you understand it then you should feel free to invest. Having said that, one of the implications of the bill could be that a lot of money from bitcoin might move to other assets if the bill really bans or restricts cryptocurrencies. Which assets will benefit is anybody’s guess at this point. May be the money will flow into equity and it will reach even higher peaks. Or may be the money will flow into gold or real estate because many think cryptocurrency is sort of similar those asset classes. Make your bets, however you please.

This is one of the reasons RBI is not comfortable with crypto. Earlier when RBI tweaked interest rates, the money used to move between equity and fixed income funds. Now with crypto becoming such a huge asset class, it is also taking a big chunk of money while not contributing to the economy unlike fixed income or equity. On the other hand, a heavy handed crypto bill can hurt crypto investors and the government may not want to risk upsetting the vote bank. So that may not happen. As usual, this is a struggle between RBI and government.

It is such a turbulent time. On the one hand we have COVID-19 still causing trouble. Nations all over have kept interest rates at the lowest to keep economy chugging along. There is a lot of liquidity to put money in the hands of people and businesses. Then we have high inflation in several countries. In all this chaos we have another asset class – cryptocurrencies, which is taking in a lot of investors money. Equities all over the world are reaching new highs and becoming expensive. Investors are not sure whether to invest in low yeilding fixed income funds like FDs or invest in already high equity market or make a quick buck with cryptocurrency. No one knows which way to go.

Where are HNIs investing?

HNIs are usually in the news because everyone wants to know where the rich are investing. Perhaps they are better informed? One news article mentions that HNIs in the Rs. 5 crore to Rs. 50 crore range are gravitating more towards financial assets, especially equities. Another article mentions that HNIs are preferring Alternative investment funds (AIFs). Don’t worry if you don’t know what an AIF is because most people cannot invest in it. You need to invest a minimum of Rs. 1 crore in AIF, so it is mainly for the very HNIs.

Finally one more article mentions that HNIs with more than Rs. 5 crores of income are actually not contributing much to mutual funds. So if you put the information from all the articles together, it seems like the HNIs are mostly investing in equities but not via mutual funds. So perhaps direct stock investments. It does not seem like they are interested in real estate if you are to believe the news.

However it is very heartening to know that individuals with less than Rs. 1 lakh income are also investing in mutual funds. The fact they are able to save even with Rs. 1 lakh annual income is amazing. The biggest contributors by number of investors is in the income range of Rs. 1 lakh to Rs. 5 lakhs. Again, very interesting that individuals in the lower income slab are able to save and invest. The rest of the income slabs have sufficient income to be able to save, so no surprises there.


There are always some interesting and conflicting news arriving on the same day in my news feed. Very strange, but that is how the news is. A good reason to not put too much weight on them. News is supposed to inform us and reduce confusion, but that is not always the case these days.