In India, the percentage of High Net Worth Individuals (HNI or HNWI) have gone up in recent times, owing to a surge in business opportunities, foreign investments, and new-age digital entrepreneurs. This lead to a tectonic shift in the wealth management industry.
A one-dimensional approach to private wealth management can shunt the diversification of asset allocation, and the new-age Ultra HNWIs are willing to explore avenues with tech-enabled, holistic solutions that span an entire spectrum of financial services.
The Indian market for ultra HNWI investments is still very nascent and yet to be explored to its full potential. There is a wide range of investments for HNWIs that includes estate planning and tax planning, alternative investments, fixed deposits, treasury bonds, government and corporate bonds, etc. even structured philanthropy indicating a commonality when it comes to their investing modus operandi.
The Difference Between HNWI, Emerging HNWI and Ultra HNWI
| HNI or HNWI | Emerging HNWI | Ultra HNWI |
|---|---|---|
| Individuals with more than Rs 2 crores investable capital | Individuals with an investable surplus of Rs 25 lakhs to Rs 2 crores | Individuals who have assets worth 200 crores and above. |
What Is a High-Net-Worth Individual (HNWI)?
A person or family with significant financial wealth is called as a high-net-worth individual (HNWI). HNWIs typically have investable assets over a particular threshold, including cash, securities, real estate, and company interests. The precise barrier may vary depending on the nation and financial institution, although it is typically set at a high level. To protect and increase their wealth, HNWIs frequently look for specialised financial services and investment options catered to their affluent status.
The number of ultra-HNWIs in India has been growing at 12% CAGR.
Types of High-Net-Worth Individuals
Based on their sources of wealth and investing choices, High-Net-Worth Individuals (HNWIs) can be divided into various groups. Here are a few typical examples:
- Investors classified as sub-HNWIs have a net worth between $100,000 and $1 million, excluding their personal belongings, real estate, collectibles, and consumer goods.
- Individuals with a net worth between $1 million and $5 million, excluding personal assets, property, collectibles, and consumer durables, are referred to as high-net-worth individuals (HNWIs).
- Individuals in the very-high-net-worth (VHNWI) category have a net worth of at least $5 million, excluding their personal belongings, real estate, collectibles, and consumer goods.
- People with investable assets of at least $30 million, excluding personal assets, real estate, collectibles, and consumer durables, are considered ultra-high-net-worth people (UHNWIs). They constitute the wealthiest category of HNWIs.
It's vital to remember that these criteria could change depending on places, currencies, and financial organizations. Additionally, when calculating net worth in the context of HNWIs and UHNWIs, it is customary to exclude personal assets, property, collectibles, and consumer durables.
How Are HNWIs Categorized?
HNWIs are categorized based on the value of their liquid financial assets. Here are the common categories:
- Sub-HNWIs: Investors with liquid financial assets between $100,000 and $1 million, excluding personal assets like a primary residence.
- High-Net-Worth Individuals (HNWIs): Typically defined as individuals with at least $1 million in liquid financial assets, excluding personal assets such as a primary residence.
- Individuals with investable assets of at least $5 million, excluding personal assets such a principal residence, are considered to be very high net worth (VHNWIs).
- Individuals with an ultra-high net worth (UHNWI) have investable assets worth at least $30 million, excluding personal assets like a principal residence. They represent the HNWIs with the greatest level of wealth.
- It's important to keep in mind that these classifications may change based on particular institutions, geographical areas, or currencies. Additionally, it is standard practice to exclude personal assets, especially principal residences, when calculating the net worth of HNWIs and UHNWIs.
What Benefits Do HNWIs Get?
High-Net-Worth Individuals (HNWIs) enjoy several benefits due to their affluent status. Here are some common advantages they receive:
- Personalized Managed Investment Accounts HNWIs often qualify for personalized managed investment accounts that cater to their specific financial goals and risk tolerance. These accounts provide tailored investment strategies and access to a wider range of investment opportunities beyond regular mutual funds.
- Estate Planning Sophisticated estate planning services are advantageous for HNWIs. In order to secure a seamless transfer of assets to subsequent generations, reduce tax ramifications, and safeguard their heritage, their wealth and assets must be structured.
- Tax Planning HNWIs have access to professional tax planning services that assist them in streamlining their tax strategies, lowering their tax obligations, and maximizing their chances of tax savings. These services can help people save their wealth as much as possible and pay as little tax as possible.
- Portfolio management Services for professional portfolio management are frequently available to HNWIs. Expert wealth managers or financial advisors can help clients create and manage diversified investment portfolios that are specifically catered to their individual financial goals and risk tolerances.
- Diversification
- HNWIs frequently receive information on exclusive investment possibilities that may not be accessible to the general public. These possibilities may include hedge funds, venture capital agreements, private equity investments, and other types of alternative investments.
- Access to Resources and Networks HNWIs can take advantage of networking opportunities to build a strong network of professionals, business leaders, and like-minded people. Additionally, they may get access to materials like research papers, market analysis, and training sessions tailored to HNWIs.
It's important to note that the specific benefits and services available to HNWIs may vary depending on their financial institution, wealth manager, or advisory firm. Each client's situation and needs are taken into consideration when providing personalized services to HNWIs.
What is KredX?
KredX is India’s leading invoice discounting platform, providing businesses and their suppliers with cashflow solutions while offering investors a unique opportunity to make low-risk and high-returns investment within a short time span. The alternative short-term investment product enables investors to invest in a brand-new asset class and get above-market returns at minimal risk.
A Profitable Solution for Investment & Portfolio Diversification
Embrace Portfolio Diversification with KredX
At the end of 2017, holding shares in businesses was the most favoured investment channel for Indian HNWIs, making up for almost a quarter of their assets. Cash, bonds, real estate, and equities accounted for over 21%. Most investments, including equity funds, are associated with a high level of risk, and therefore diversification of portfolio is required to maximise the returns. Invoice Discounting is a great opportunity to build a portfolio in a novel way for HNWIs seeking diversification in their investment plan. With KredX the HNWI portfolio strengthens to form a remunerative investment avenue at minimal risk to compensate for the deficiencies of the changing markets.
Why More HNWIs Are Making The Switch To KredX
KredX offers a reliable and definitive short-term investment option for HNWIs with minimal risk. Invoice discounting is a safe investment and a brand-new asset class with a healthy portfolio diversification at above-market returns and minimal risk in a short time frame. The entire process is fool-proof, wherein:
- KredX monitors the security of every transaction through Escrow Accounts for both Businesses and Investors, separately.
- All the important data points after evaluation by the KredX risk team are summarised in different reports at the vendor, enterprise, and deal level.
- Pre-vetted and verified invoices are uploaded on the platform with credit score and reports for investors to make a sound investment decision.
The Pros Of Invoice Discounting For HNWI
Unique fixed-income decisive short-term investment
- Strengthen your portfolio with maximum returns within 30-90 days
- Profitable asset class for 12-20%* IRR
- Crafting solutions to earn annualised returns in 30-90 days at low risk
Secured Risk Mitigation
- Comprehensive business model with no execution or market risk
- 360° credit risk analysis system at multiple stages
- Multiple verifications of the relationship between borrower and enterprise
Eligibility Criteria:
To start investing in KredX, one has to be:
- A citizen of India (can be an NRI too)
- Should invest a minimum of 3 lakh INR
- Should hold a valid PAN card
How It Works?
- Investor signs up and logs into the KredX platform
- Investor purchases the invoices of their choice
- Funds are disbursed to the vendor’s bank account in 24-72 hrs
- Upon tenure completion, enterprise credits invoice amount into an Escrow account
- KredX then transfers this amount to the investor
- Investor makes ~12-20% profit in 30-90 days
Conclusion:
High-Net-Worth Individual (HNWI) in India is defined as someone with liquid assets of at least $1 million. These individuals often seek the assistance of financial professionals to manage and preserve their wealth. Being an HNWI grants them access to additional benefits and investment opportunities that are typically unavailable to the general public.
Private wealth managers actively pursue HNWIs due to the complexities involved in maintaining and growing their assets. While the United States currently has the highest number of HNWIs globally, India also boasts a significant number of wealthy individuals.
It's worth noting that liquid assets do not include primary residences or works of art, as these cannot be easily and quickly converted into cash. HNWIs in India rely on financial experts and specialized services to navigate the complexities of wealth management and maximize their investment potential.
FAQs
Individual resident investors, HUF / Proprietorship registered in India Institutional investors, NRI investors (Provided you have an NRO account and comply with basic predefined KYC guidelines- Pan card and valid Indian address proof)
You can invest a minimum of INR 3 lakhs per deal.
Invoice Financing is a very niche product and KredX's Invoice Discounting platform ensures higher short-term yield for its investors. Our conservative and ever-evolving risk management policies minimise the risk of investing for our investors.
No. Being an ISO 27001:2013 certified private entity which deals with secure information from the clients, KredX takes strict measures in dealing with secured information.
KredX provides the option of short-term investments to our investors due to which the maximum tenure for a discounted invoice is 90 days.
