Letters to the Editor's Note

Summary: Equity is all around us. Yet most Indians still shy away from it. Why? In this powerful reflection, Dhirendra Kumar unpacks a truth few acknowledge. And readers respond with personal stories that reveal just how real the gap still is.

Dhirendra Kumar’s Editor’s Note, ‘India’s most underrated investment asset’, published on July 26, 2025, argued that equity—despite all the noise—is still largely ignored by most Indian savers. He unpacked why equity’s long-term value remains misunderstood and underutilised.

The piece struck a chord with readers who reflected on their own investing journeys and the persistent gap between perception and reality when it comes to building lasting wealth.

Summary

Some time ago, someone asked me what I considered the most underrated investment asset in India. Depending on your perspective, you could argue for practically anything. But if you take a wide-angle view of the savings landscape, there’s only one real answer: equity, and by extension, equity-backed mutual funds.

This may sound counterintuitive. After all, equity markets generate a lot of noise—business media is filled with stock tips, predictions and commentary. But that noise lives inside investment circles. Most Indians never hear it. For the broader savings population, equity takes a backseat to bank fixed deposits, PPF and other government schemes. Equity is still viewed with suspicion, as something akin to gambling or reckless speculation.

To understand why equity is underrated, we need to rethink what that word means. It’s not about popularity but the gap between perceived value and actual value delivered over time. 

And by that measure, equity stands unmatched.

Equity has the unique ability to keep pace with economic growth and inflation. When you invest in a company, you invest in its growth, profitability and adaptability. Over the past two decades, India’s GDP has grown at 10–12 per cent annually, and well-managed equity portfolios have matched or even exceeded that impressive pace.

The real risk isn’t equity’s volatility. It’s the failure to grow wealth fast enough to preserve purchasing power. Sadly, most savers miss this point entirely. They are excluded from equity’s long-term benefits right when India’s economic story is most vibrant. That is the true tragedy of equity being underrated in our country today.

What our readers say

It’s absolutely right that investors’ eyes are either blocked by short-term thinking or imaginary notions about equity. Back in the day, my first broker in Chennai advised me to buy stocks like HDFC Bank (listed around Rs 30), Sundaram Finance and Colgate—and hold them till retirement. But we were content making small gains and never thought beyond that. Everything was manual then, and buy or sell orders were accepted only till 2:30 p.m.

Had I followed that advice and invested in those scrips, the returns would be unimaginable today. As I wrote earlier, and as you rightly said, people often lack the patience or vision to follow sound advice. I eagerly wait for your mails, though disappointed that they come only on Saturdays. But I console myself that it’s a weekly gift. - S Mukkunden

Wonderfully written. Like many senior citizens, I missed the equity bus early in life and couldn’t take the plunge later, when capital preservation became more important—even at the cost of negative, inflation-adjusted returns from FDs.

That said, your article sounds a clarion call to the younger generation to invest in equity, while keeping a small portion in fixed-return instruments for balance. - P S Banerjee

I am 61 years old. I used to believe more in fixed deposits and was investing only a small portion in mutual funds. Reading your earlier articles and watching your YouTube interviews has given me confidence. Over the past two years, I have been increasing my mutual fund investments. - R D Modi

People with a trading mentality are not true investors who can benefit from compounding returns. Also, as rightly said, people should not stop investing in EPF or FDs. The real value of investing in EPF or PPF is not in the interest rate but in the power of compounding over the years. - Arvind Padmanabhan

You presented the right picture. But truly speaking, there is a risk in equity that does not exist in FDs or PPF. For retired persons, it seems risky because sometimes, for 4-5 years, stocks deliver poor results.

I have done SIPs in many blue-chip stocks like HUL, Nestlé, Tata Global, Airtel, Asian Paints and Tata Motors. But they have not given good returns over the past 2-3 years. Your advice is best suited for those in the 25-45 age bracket. That said, I am fully invested in the stock market, as I have regular income for my daily needs. - A K Pathak

Undoubtedly, a larger allocation to equity in a growing economy like India is a must. Asset allocation is key, but it’s difficult for individuals to maintain it consistently unless they commit to a fixed schedule. That’s why funds like aggressive hybrid or balanced advantage are ideal—they do the rebalancing and keep equity allocation above 50 per cent for those who don’t want to manage it themselves.

Of course, this also depends on age. A 25-year-old can go all in on equity (aside from emergency savings), while a 60-year-old will do things differently. So it’s more nuanced than what the note suggests, but it sets the right direction. - Shishir Parhi

Equity is underowned, not overhyped

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This article was originally published on August 20, 2025.