Roshan has been taking active interest in his investments and has been reading articles, watching TV channels on the subject and coming up with his own analysis. He is of the firm opinion that one needs to be hands on with investments and even makes his financial advisors run with him to make his money grow faster.
Dilip was groaning internally. This has been how his calls usually go and they stretch on interminably with Roshan doing most of the talking. He talks about investment themes, which products to invest in, expounds on the trends in the economy, markets, businesses etc.
He would invariably come up with some new investment products that are doing well and seemed to have potential. He had wanted to invest in various PMS, AIFs, direct investments in startups, international investments in stocks, ETFs, REITs etc., direct real estate investment in different countries, cryptos, peer-to-peer lending products etc.
Wealth growth as an objective by itself
Dilip had tried to understand whether there are any specific goals or objectives Roshan was working towards. Dilip did not find anything substantial. In one of the calls, he had even asked Roshan as to why he wanted to maximise his returns when he already had a huge corpus that will continue to grow.
Roshan was aghast at that time. “Don’t we all want to maximise our returns? What else is the purpose of investment when the normal goals are taken care of?”,” he asked.
Dilip had responded that risk containment and capital preservation are objectives that need to be considered as Roshan was nearing retirement and the wealth was already substantial. Roshan was not impressed.
Dilip changed tack: “What will you do when your wealth doubles? What will change for you then?”
Roshan looked blankly at Dilip. The answer was obvious. Nothing really would change. Roshan wanted to increase the wealth for its own sake and that had become the opium that was driving him. This is the way it is with most high networth individuals (HNIs).
High anxiety levels
There is a very curious thing we as advisors have observed. Even those who have a substantial corpus are still worried sick about their future. These are the people who keep asking us whether their future is secure and whether they are well funded.
We find it incredulous that such people can have anxiety regarding their finances, especially when it is clear that they have enough money for everything they can think of.
These people want us to take very high medical insurance covers, which is not really required as they can foot their bill easily if it goes beyond the normal cover. It is probably such anxiety that makes them look at higher and higher returns.
The blinkers are on
Many of these people have been very successful in their careers. They tend to extrapolate their smartness to all areas, including finances. Many of them are business people who tend to compare their investment returns with their business returns.
They reckon that investing into their business is best and if they have to invest elsewhere, it better give returns that are higher. Most such people overestimate their investment acumen, are overconfident, don’t diversify the investments and underestimate the risk being taken.
Also, for many people who have created their wealth over time, it’s their baby. They won’t put it down. They won’t allow another to touch it. Even if they do allow, they will be totally hands on, dictating what to do.
They miss what is truly important
We all want to be successful and be seen as a success. Many have become ultra-wealthy through their pursuits and the wealth they have built has taken on a life of its own. They define their success in terms of their ability to grow their wealth, instead of framing their success and worth in other fulfilling ways.
Having made their money, they could have focussed on living a life that is happy, exciting, peaceful and fulfilling. That may mean pursuing hobbies like music, gardening etc., being engaged in social/ cultural activities, having a vibrant social life with friends and relatives, travelling to various places etc.
Some also want a life that is purposeful and meaningful. That quest may take them in many other directions that they will find enriching and elevating. These are the truly important pursuits in life. Someone who has the money is in a position to pursue this much easier than others who are grappling with financial commitments. And truly enjoy what life has to offer. What is true for HNIs is largely true for all of us.
Philanthropy and social impact
All of us are able to achieve our success and distinction due to the help and contribution by various people along the way. We do not succeed in a vacuum and we need to acknowledge that. Hence, when we succeed in life, we need to keep that in mind and pay it forward to others.
Different people do it in different ways. Some teach, coach and pass on their knowledge. Others contribute monetarily over and above that. Still others do involved philanthropy, where they contribute, manage, monitor and ensure that their donations have the desired social impact. There are many social impact projects into which one can invest into. In such projects the returns may be small; but one gets the satisfaction of contributing meaningfully to society. HNIs are in an ideal position to engage in this.
Life is all about doing what is appropriate at various stages in life. In Hindu philosophy, there are four asramas in life – Bramhacharya, Gruhasta, Vanaprastha and Sanyasa. The person should exhibit asrama appropriate behaviour.
Similarly, as we move along the wealth slider, we need to change gears and move on to other fulfilling areas and make life an absolutely delightful and rewarding experience, in the next phase of life. We need to reframe what constitutes success for us now.
We need to be willing to let go and rediscover ourselves and boldly move on to embrace life. Unfortunately, clinging on to money and getting fixated with it drains one of energy and makes life a drudgery.
Having money should be a liberating experience. We should learn to make money work for us and not be its prisoner. Only we can make that happen.
Suresh Sadagopan is the MD & Principal Officer of Ladder7 Wealth Planners Pvt. Ltd. and the author of the book If God was your Financial Planner