Veteran investor Devina Mehra shares crucial insights on why you should never put 100% in equity, the imperative of global investing due to rupee depreciation, and disciplined exit strategies for Indian investors.
In today’s digital age, investing often gets portrayed as a simple, quick path to wealth, with many believing that small investments can rapidly multiply into crores. This narrative can be misleading, especially for young and ambitious investors looking to build their financial future. To cut through the noise and provide grounded wisdom, we sat down with one of the most respected voices in the financial world.
Our guest, Devina Mehra, is the Founder and CMD of First Global, a data-driven investor with over three decades of experience in the financial markets. Starting her journey in 1993 after working at Citibank, Devina Mehra has been at the forefront of India’s financial liberalization, even becoming the first Indian (and non-Japanese Asian) member of the London Stock Exchange and then NASDAQ. Her unique approach, which emphasizes meticulous research and questioning conventional wisdom, offers invaluable lessons for every Indian investor.
Dive deep into her profound insights and watch the full conversation here:
Guest’s Key Insights
1. On the Myth of Easy Investing & DIY Investing: Devina Mehra strongly cautions against the “get rich quick” mentality prevalent in the digital world, where people assume the stock market is a place to become wealthy without effort. She emphasizes that good investing is actually quite “boring” and focuses on core principles like asset allocation and risk management, rather than entertainment. While DIY (Do It Yourself) investing is popular, she suggests it’s not realistic for most investors who lack professional investment backgrounds or sufficient time. She advises a practical approach: if you’re good enough to outperform professionals, invest 100% yourself; otherwise, allocate 10-20% for learning and give the rest to professionals.
2. On Equity Allocation & the Unpredictability of Returns: Despite having a long-term view (e.g., 30 years) and being aggressive, Devina Mehra unequivocally states, “100% of your money should never be invested in equity“. She explains that equity returns are unpredictable for even 5-7 years, let alone shorter periods. Life is full of unexpected expenses like further education, job loss, medical crises, or down payments for a home, for which you need easily accessible funds outside equity. She illustrates this unpredictability with historical Sensex data, showing decadal returns varying wildly, from 21% compounded in the 1980s to just 8% in the 2010s.
3. On the Imperative of Global Investing: A critical reason for global investing, according to Devina Mehra, is the depreciation of the Indian Rupee. She notes that the rupee has depreciated by 90% in just one career span (since she started her career when the dollar was ₹12). Investing abroad acts as a natural hedge against this currency risk. Furthermore, she highlights that the Indian equity market constitutes less than 5% of the total global market capitalization, making it illogical for an Indian portfolio to be 90-100% invested only in India. She advises that at least 30% of one’s portfolio should be invested globally. However, she stresses that global investing means more than just buying a few US tech stocks or an S&P 500 index; it involves understanding diverse global companies and markets, which is a complex endeavor.
4. On Exiting Investments & Risk Management: Devina Mehra firmly believes that “entry can be wrong, but exit should not be wrong”. She argues that true outperformance in investing stems from robust risk management, especially during market downturns. She advocates for a systematic approach to selling, free from emotional biases like “endowment bias” (overvaluing what you own). For individual investors, she suggests implementing a trailing stop-loss—for example, selling if a stock falls 25% from its peak, rather than a fixed entry price. This disciplined approach, even if a stock later recovers, can save you from significant losses and prevent your mind from coming up with endless excuses to hold onto underperforming assets. For her PMS clients, she allocates 60% of fees to risk management, emphasizing its paramount importance.
What This Means for Indian Investors
• For Young Salaried Professionals (20s-30s): While aggression is good, understand that 100% equity is a trap. Always maintain an emergency fund and diversify your investments beyond India. Consider starting your global allocation with even small amounts. Don’t chase popular “rack to richest” stories; focus on asset allocation and long-term goals.
• For Middle-Class Families & Small Business Owners (30s-50s): Your core focus should be on asset allocation across different classes like equity, debt, gold, and global investments. Avoid the “entertainment” aspect of investing; treat it as a serious wealth-building tool. Be wary of thematic New Fund Offerings (NFOs), as they often launch at market peaks, leading to underperformance. Prioritize professional advice, as your time is better spent on your primary occupation.
• For Students & New Investors: Begin your investing journey early through SIPs, but diversify across asset classes, not just equity. Understand that gold has a place in your portfolio for diversification and as a currency hedge, but it’s also volatile and not a guaranteed “safe haven”. Most importantly, cultivate discipline in your selling strategy; consider implementing a trailing stop-loss to protect your capital.
Conclusion
Devina Mehra provides a powerful reminder that successful investing isn’t about magical shortcuts or endless growth in a single asset class. It’s about realistic expectations, smart asset allocation, global diversification, and disciplined risk management. Her advice to never put 100% in equity and to actively manage exits offers a robust framework for long-term wealth creation.
We encourage you to watch the full podcast to grasp the depth of her experience and insights. What are your thoughts on global investing or Devina Mehra’s views on equity allocation? Share your comments below!
Disclaimer
The views expressed in this podcast/blog are solely those of the guest and do not represent financial advice. Please do your own research or consult a financial advisor before making investment decisions.