Wise Wealth Advisors

D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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The Rich Indians

Posted by Muthu on September 4, 2010

It’s 4 am now and the whole atmosphere is very quiet. Nice time to think and share my thoughts with you.

Started reading the book ‘The Mind of Wall Street- A Legendary Financier on the Perils of Greed and the Mysteries of the Market’ by Leon Levy, the founder of Oppenheimer funds.  I first read the book around 3 years ago and am now reading it for the 5th time. This is one of my favourite books on the Psychology of Stock Markets. I’ve not seen this book in either Landmark or Odyssey. So if you are interested, you may obtain a copy for reading from Eloor Lending Libraries. If interested, you may contact me for further details.

Incidentally Eloor is the best library in Chennai for book worms like me. I would have introduced many people to this Library and all of them are happy to have found such a place.

Coming to today’s topic of discussion, how many people in India are Rich?

First let us define Rich or HNIs as per global standards.

Rich are defined as those having investible assets of $1 million or more, excluding primary residence, collectibles, consumables and consumer durables.

To put it more simply, Indians having investible corpus of around Rs.5 crores or more other than their primary residence, cars (whether it is Mercedes Benz or BMW or Bentley) and consumer durables like Air Conditioners, Plasma TV etc. are considered Rich.

Any guess as to how many people in our country have Rs.5 crores+ of investible corpus, to be called as ‘Rich’.

Considering that we’ve population of around 1160 million, you would not believe the figure I’m going to say. As at the end of 2009, there are only 1.3 Lakhs Indians who can be classified as rich, a mere 0.01% of the population. This figure was as low as 84 thousand in 2008.

Believe it or not, in most likely hood, you and I may fall under 1% of the India’s elite. Just to show the miles to go and the kind of exponential growth which is ahead of us.

Where do these rich people invest their money? Again a surprise. More than 50% of their funds are parked in financial assets like mutual funds, stocks and bonds, the types of investments that individual like you and I can also buy. The balance is predominantly invested in Real Estate. Then comes the other avenues like private equity, art, foreign funds, and gold.

I’ve mentioned in the past that it is foreign investors who are mainly participating and profiting out of the growth of our economy. Due to lack of awareness, Indians are not part of India growth story. Even the optimistic estimates suggest that there are only 8 to 10 million Indians who are participating in our country’s growth by investing either through Mutual Funds or directly in Stocks. A mere 0.86% of our country’s population.

For example, in the year 2000, the equity corpus managed by the mutual funds was around Rs.40,000 crores. In 2010, the figure stands somewhere around Rs.200,000 crores, an increase of 5 times in 10 years. But if you probe little more, you would find  that the market has multiplied by 6 times in the last 10 years. This means that the incremental assets added is Zilch and the same set of investors are continuing to reap the benefits.

Also it would be appropriate to explain you one more thing here, People only keep looking at Sensex which constitutes merely 30 stocks or Nifty which constitutes only 50 stocks as a measure of our growth. Please understand that there are thousands of companies which are listed in our stock market and mutual funds never restricts themselves to handful of Sensex and Nifty stocks but invests in the broader market.

We do not mind investing in Gold Quest, Maxima, Royapettah Benefit Fund, Anubhav Plantations and private fixed deposits which provides us high ‘assured returns’, though time and time again our trust and greed have been exploited by private finance companies and MLM (Multi Level Marketing) schemes.

Even though  mutual funds many a times provide more than the ‘assured return’ promised by the above, since they do not and should not guarantee returns, people are hesitant to invest and be part of our superior economic growth. 

In this context, you can understand my passion about SIPs (Systematic Investment Plans). People with an investible surplus of as low as Rs.500/- per month can participate in our economic growth. When foreigners can benefit from our economic growth, why don’t our own countrymen?

If you compare our 0.86% of the population who has invested in mutual funds and stocks, more than 50% of the American households have invested in mutual funds, which helped in creation of the ‘Great American Middle Class’ in the last 6 decades. 

By luck, this generation and the next are in a sweet spot of participating in our extraordinary and exponential growth we are likely to have. The growth is going to be exponential in the next few decades because we are still at a very low base.

Please save invest atleast 20% to 30% of your income for long term. We’ve to first create wealth so that it can start percolating downwards.

The best and simple way for our people to create wealth is to invest in mutual funds through SIPs. Please refer to the pages ‘SIP Crorepathi’ and ‘Time or Timing’ in our portal  www.wisewealthadvisors.com to know more about this.

I’m requesting a help from you. Why don’t each one of you identify atleast 5 to 10 people among your near and dear, friends, colleagues, employees and share the message of  building wealth through SIP route? Why don’t we be part of making our own people wealthy and financially independent? Every single SIP we get provides us immense satisfaction which cannot be explained in words. As we are growing only through referral method, your help is very critical for us to reach more people.

I’m not going to hesitate seeking your help time and time again because that is the only way for us to bring in more people to gain from the immense growth of our economy.

Making our own people participate and gain from our growth is the best help we can do for someone. Making one generation to be financially independent and create wealth is one of the wonderful things we can do.

May I request you to be part of this?

(with data inputs from Wall Street Journal and Rediff)

4 Responses to “The Rich Indians”

  1. Gurdial said

    Pretty hard to believe that so few people in India fall under rich category, one would expect around 5 crores at the minimum to be rich . Looking at cites like Delhi or Chandigarh, one would think there would be couple of lakh rich guys in each of these cities.

  2. pasaha said

    iam working as a computer operator in hyd zakat charitable trust my service is collected zakat whoem from they are riches persons so help me

  3. Janardhan reddy said

    dear sir,
    i request you to please help me how to invest in sip mutual funds, because i have got my 1st salary dis month and i dnt knew anything how to invest where to invest. plz educate me. atleast plz give me some links to learn about sip.
    thank you

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