New Delhi: Even before the heat of the financial crisis has completely abated, optimists around the world are anticipating a rewarding year ahead— and particularly so in the Indian subcontinent, where four out of five respondents to the Scorpio-Standard Chartered Future Wealth survey expect their finances to improve in the next 12 months.
“(C)onfidence levels among the future wealthy in emerging economies, particularly Asia and the Indian Sub-continent, have snapped back despite some damaging losses,” the report, released on Tuesday, says. “A healthy dose of déjà vu appears to have put some perspective on the financial crisis for those in these more volatile regions.”
With a view to identifying what it dubs the “future wealthy”, the report surveyed 1,414 people across the world, with an average wealth of $2 million (Rs9.6 crore); at least one-third of the respondents were based in the UK.
Driving ambition: A Jaguar Land Rover showroom in Mumbai. Respondents from the subcontinent had set themselves an average target of $9.07 million ‘to achieve their life ambitions’, outstripping every other region. Adeel Halim / Bloomberg
It could be argued that the “future wealthy”, by definition, need nothing but optimism— but then again, the report notes that 28% of future wealthy Britons think their finances will not improve in the coming year.
Surprisingly, family wealth and investments play little role in the financial lives of the future wealthy; 96% of them said that it was steady income from a job that was the major source of their wealth. Of the 1,414 people surveyed, 60% were salaried professionals, many of them working in the financial services industry.
On various fields of the survey, the Indian subcontinent region lay resolutely in the middle of two extremes represented by North America and Central and Eastern Europe. For instance, 47% of Central and Eastern Europeans reported that their financial situation had improved over the last 12 months, as did 36% of North Americans; from the Indian subcontinent, the figure stood at 43%.
The optimism out of India is particularly surprising in the light of the Merrill Lynch-Capgemini World Wealth Report released earlier this year, which charted a decline of 31.6% in the country’s high net-worth population, the second largest in the world.
“It all stems from cheap money. When interest rates are next to nothing, money goes into assets like equity or gold, so those assets remain at a high level,” said Rajan Mehta, executive director of Benchmark Mutual Fund. “We’ve seen that optimism too, especially after the elections got over and after the bad news stopped from the Western world. At least there’s a sense that the worst is behind us now. But whether that optimism is well founded, we’ll only know in hindsight.”
Significantly, a fifth of those surveyed from the subcontinent believe that a sale of a business will be important in building their wealth. By comparison, in North America, dubbed the “spiritual home of the free market” by the report, “only 10% of the future wealthy have the sale of a business venture written into their wealth plan, (which) suggests that attitudes to the risks involved in business ownership may well have changed”.
But ambitions in this region have scaled up as well. Worth $2.23 million on average, the survey’s respondents from the subcontinent had set themselves an average target of $9.07 million “to achieve their life ambitions”—outstripping every other region by at least $1 million.