New Delhi: With about 4.5 lakh millionaires and 166 billionaires (both in US dollar terms), the new tribe of super-rich in India is growing with every passing year. So how do some of these richie rich Indians manage and grow their wealth in a way that leaves a lasting impression not only in their own lives but also in society as well?
With this research, veteran financial advisor Rajmohan Krishnan, whose company Entrust Family Office manages funds of over Rs 12,000 crore, has scoured to find 35 wealthy men and women he describes as " wisely wealthy". After long meetings with ultra-rich people such as NR Narayana Murthy, Anand Mahindra, Uday Cuttack and Ashish Dhawan, he compiled their stories in Juggernaut's recently published Wise Wealth.
Here are seven simple mantras that, as mentioned in the book, have helped Indian billionaires grow their fortunes conservatively, ethically and transparently.
Krishnan wisely says that the wealthy people realize that the market is full of badly designed or deceptive products that seem to bring in more profit. “In fact, it can have hidden costs and can be unsustainable. He writes in the book that the worst capital is locked up for long periods of time and can force even the very wealthy to liquidate their prized possessions for large unexpected expenses.
Renowned investor Ashish Dhawan, whose private portfolio is widely tracked by retail investors, says the hard-hitting school teaches you that floundering capital doesn't do much good.
“It's better to secure your money and not move it too much. You have a five-year or ten-year horizon. Even if you can't pick winning stocks, you'll be a smart stock investor simply by investing for a long time in the market. Remember, asset allocation is sometimes more Much more important than stock selection. Get the asset allocation right and stick to it no matter the bumps in the road,” he says.
The book finds that many morally affluent people have suffered a decline in the value of their brand when they unknowingly make investments that are not in line with their ethics. “Somebody with a visibly vegan lifestyle can inadvertently invest in the meat industry. Someone else with strong environmental views may not realize that they are investing in thermal power companies. … The The wisely wealthy know that it is better not to earn the extra couple of million dollars.”.” ".
This mantra is all about staying away from products designed to seduce, but they are sure to fail. Many quantitative products, some derivative products, some investments linked to market movements, hedge funds and many other layered products fall into this category. Efforts are needed to track the actual growth of investments in these products.
Watching a stable investment portfolio is as exciting as watching your nails grow or dry. “It is not a phenomenon worth reporting. This is great news for the wise rich and a sign that they are making the right bets.”
Krishnan says real estate investments aren't worth it, as over a 30-year period, the returns aren't much higher than those on term deposits. In addition, real estate can be unpredictable, illiquid, contentious, difficult to maintain, emotionally charged, prone to wear and tear, and may be deemed unsuitable for the next generation to occupy.
“So wisely, wealthy people tend to invest in their dream homes and maybe a vacation home or two. Once they start enjoying the emotional stability that comes from belonging, they forget about this asset class altogether,” he says.
The above statements facilitate another long-term concept called compound, which becomes more effective as one continues to grow their investment pool. This can happen either by earning more or spending less. Both options provide more wealth for investment,” the money manager wrote in the book.
This is the overarching mantra that ties all of the above principles. Following these mantras requires discipline, Krishnan says, and becomes disciplined by humbly accepting that the collective wisdom of the markets and the wealthy is more reliable than one's passing instincts.
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