How the inheritors manage wealth
Imagine you are on top of a mountain and decide to dive. You know it’s risky, but you have a parachute and you are sure it will protect you. A billionaire parent is like that parachute, but you still need to jump off the mountain.
This year, for our annual Mint Rich edition, when we walked into the lives of these inheritors to talk money, they were unexpectedly shy. They did not want to be tagged as rich. Many of the richest 1% Indians we interviewed for this edition referred to themselves as middle class, with “middle-class values”. The people who manage their wealth explained this shyness, saying “the word billionaire has a negative connotation”.
But there were some who gave us a glimpse of their money journey. No, there were no tips on five or 10 ways to become a billionaire, just some basic money-management advice. All in all, for the inheritors, the focus is on wealth appreciation while keeping an eye on wealth preservation.
For instance, Anant Goenka, son of Harsh Goenka of the RPG Group, has worked to increase the market cap of Ceat Ltd from Rs300 crore to Rs7,000 crore in the last five years. When it comes to his own money, the focus is largely on capital preservation, with an element of risk to ensure an upside.
Diversification is equally important when it comes to money management. The men and women who run diversified conglomerates, also believe in diversifying their financial portfolios. For instance, Adar Poonawalla, son of Cyrus Poonawalla, of Serum Institute of India Pvt. Ltd, believes in investing in a combination of products—government bonds, equities, his own vaccine business, financial services, real estate, horses and art.
A closer look at asset allocation tells us while the older generation was focused on physical assets such as real estate, there is enough evidence of the new generation shifting towards financial assets. Wealth managers are expecting this shift to accelerate, given the structural changes in the economy. (The net-worth figures in the edition have been sourced from Forbes, as on 14 September).
One thing is clear: The inheritors are not shy of taking risks. For instance, Sunil Bharti Mittal’s son Kavin ventured into the start-up space and carved his own niche, while Embassy Group heir Karan Virwani has invested in bitcoins and is bringing global start-ups to India. Armed with Ivy League degrees, a willingness to innovate and, if required, opt out of their core business, this generation is willing to take on challenges. And, unlike their parents, they are open to taking help from professionals—both in business and personal wealth management.
In this edition, we take a broad look at the lives of the inheritors, their investment strategies, consumption patterns, mistakes and philanthropic activities. Hopefully, their stories will inspire you just as they have inspired us.