Aug 22, 2010

How Do Wealthy Indian's invest?

Indians are getting richer. More than 130,000 people now have net worth more than $1 million. So how do these individuals manage their money?


Bulk of it is in stocks, bonds, mutual funds. But they also avail of wealth management and private banking services that allows them to get the following.


1. Structured Products and Notes


Principal protected notes that allows them to protect from the market downturn without sacrificing the entire upturn if the market soars. Typically, for a fee as a percentage of their assets invested, they can get their principal pack if the market tanks or get about 80% of the market upside.


2. Real Estate


They get these by buying assets directly - a risky approach or by participating in pooled investments such as REITs - real estate investment trusts.


3. Asset backed Debt


They buy bonds with dedicated real assets as collateral. These earn them anywhere from 11 - 16 % in interest. Given current 7 % bank deposit interest in India, this is a good deal if you can stomach the risk.


4. Niche investments


Also called passion investments - currently water and renewable energy being on the top of the list.


Many own 5% gold as well. 


So, there you go. How's your portfolio?