Ways India’s Super-Rich Spent Their Money

Cars, luxury yacht, private islands, watches, high end jewelleries, electronics etc. are some of the few things on which the super rich Indians spent/invested their money in. Over the past few years the amount of money spent by Indians has multiplied to a huge extent. Forgotten were the days where it was invested only on land or business, the new trend in spending has a good deal of western influence. The wealthy here are defined as people with an average net worth of 250 million Rupees ($5.6 million) for the financial year ended March 31, 2011.

Let’s consider cars, although sports cars like Ferraris and Lamborghinis are brought as one would suppose. But a new study shows that though they are purchased, cars like Honda and Toyota are purchased more as it is more suitable for the Indian road and for regular use in the cities. Although luxury cars brands like Mercedes and BMW whose on road is 2.3 million($51,000) or above is also purchased for their class value where as sports utility vehicles(SUV) are purchased as ‘ambitious cars’. In a household of this category a minimum of two-four cars are found.

Next in this list are jewelleries, who wouldn’t like a three-carat solitaire and other precious stones. According to a report the Indian luxury market is estimated worth 229 billion rupees ($5.1 million). Moving on the next in the list are electronics, with 55 inches or more TV, custom made entertainment rooms or theaters, home entertainment systems, high end mobile phones, laptops etc are the areas of major expenditure in this category. Art considered a very valuable investment which over the years will fetch high returns get a minor portion in the spending scale although usually made as an impulsive purchase. Next is custom made holiday trips with family usually made months in advance. Incidentally many of the rich fear buying things using their personal credit cards fearing fraud. In these cases their corporate credit card is used.

This study carried out by Kotak wealth management and rating and research firm Crisil Ltd interviewd 150 super wealthy individuals in India’s major cities of Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad and Chennai, categorized the respondents calling them ‘inheritors’, ‘self-made’(first generational entrepreneurs) and ‘professional’(salaried individuals). From this the Professionals are the major spend thrifts nearly 29% whereas the inheritors and self made spend 21.5% and 20% respectively. Where shopping is considered the inheritors shop abroad whereas the self made do the shopping in India only. Earlier this year study carried out by citi private bank and Knight Frank shows Indians lead the world millionaires spending on yachts and private jets.

Kotak/crisil report shows one Indian billionaire owning 4 yachts another owning a island in lakshwadeep and a luxury mansion on a secluded island off the coast of Cannes. Some respondents also show storing their stem cells which is a high expense affair.

Source: http://india.wsj.com/home-page
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