Managing substantial wealth comes with unique challenges and opportunities. High net-worth individuals (HNIs) need to understand the intricacies of their financial status and the best investment options available to them. From equities to hedge funds, and real estate to collectables, HNIs have a range of sophisticated strategies to grow and protect their wealth.
What is HNI?
The term HNI full form stands for High-net-worth Individual.
This designation typically refers to individuals with substantial financial assets, excluding their primary residence. While the exact threshold varies globally, in India, HNIs are generally defined as individuals with liquid assets exceeding ₹5 crores.
Understanding HNI's meaning is essential for those aspiring to join this elite financial group and for businesses targeting such clientele.
Types of high-net-worth individuals
High-net-worth Individuals can be classified based on the magnitude of their wealth and their financial behaviour:
1. High-net-worth individuals: Those with liquid assets of up to ₹5 crores.
2. Very-high-net-worth individuals: Individuals with a net worth in range from ₹5 crores to ₹25 crores.
3. Ultra high-net-worth individuals: Those possessing a net worth exceeding ₹25 crores.
How HNIs manage their wealth
- Diversification: Spreading investments across various asset classes to mitigate risks.
- Professional advisory: Engaging with wealth managers and financial advisors to create and execute effective financial plans.
- Tax efficiency: Implementing strategies to optimise tax liabilities legally.
- Philanthropy: Many HNIs engage in philanthropic activities, which not only help in tax planning but also enhance their social reputation.
Investment options for HNIs
Equity investments
Equities offer significant growth potential, particularly in blue-chip companies and emerging markets. They provide the opportunity for substantial returns over the long term, making them a popular choice among HNIs.
Hedge funds
Hedge funds use diverse strategies to generate high returns, such as long-short equity, market-neutral, and event-driven investments. They offer HNIs flexibility and the potential for high rewards, albeit with higher risks.
Real estate
Real estate investments provide steady rental income and capital appreciation. HNIs often invest in commercial and residential properties as a means to diversify their portfolios and secure long-term financial stability.
Structured products
Structured products are tailored investment strategies that offer specific risk-return profiles. They allow HNIs to customise their investments according to their financial goals and risk tolerance.
Art and collectables
Art and collectables can be both financially rewarding and personally satisfying. These tangible assets often appreciate over time and add a unique, non-correlated asset to an investment portfolio.
Mutual funds
Mutual funds pool money from multiple investors to invest in diversified securities. HNIs prefer mutual funds that cater to higher-risk appetites and offer superior returns, balancing their investment portfolios.
Also Read: How to invest in Mutual Funds in 7 easy ways
Conclusion
For high-net-worth individuals, investing is not just about growing wealth but also about securing their financial future and achieving long-term goals. Strategic investments enable HNIs to diversify their portfolios, mitigate risks, and take advantage of various market opportunities. Effective wealth management ensures they maintain and enhance their financial standing.
Leveraging professional financial services can significantly benefit HNIs in managing their wealth efficiently. With comprehensive wealth management solutions, Axis Bank provides tailored financial advice and a wide range of investment options, helping HNIs achieve their financial aspirations seamlessly.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision
Mutual Fund investments are subject to market risk, read all scheme related documents carefully. Axis Bank Ltd is acting as an AMFI registered MF Distributor (ARN code: ARN-0019). Purchase of Mutual Funds by Axis Bank’s customer is purely voluntary and not linked to availment of any other facility from the Bank. T&C apply.
