I know a few HNI investors. One thing common to all HNI investors is that they do not like to be classified as a “HNI”. This is good for the adviser too, because no 2 HNIs are alike.

Some HNIs are well assured of themselves, satisfied with how their life is going and understand their finances. If you thought this is how all HNIs are – you are mistaken. HNIs are after all human and have all the problems of a typical human being.

Let me narrate the story of a one (former?) HNI investor. Am not saying this is typical, but he is one.

He deals with 4-5 banks, watches 3 business channels, handles technology for his organization, “reads” 2-3 business papers, reads 2-3 ‘investment’ magazines.

Now is the trick question. How many advisers do you think he has?

To my mind it is about 15 advisors. He hears them all, listens to none. His portfolio is a pot pouri of mutual funds, real estate pms, direct equity, structured products, rbi bonds, real estate, et al. Also very typical of a bull run he has committed himself to a real estate deal which requires regular payment of Rs. 2L a month for the next 3 years! He called me to ask from where to fund this real estate deal. I am one of those unfortunate ‘advisers’ he has. If I ask him for the full picture, he snorts “I know what is happening in my life”. So I have to run a delicate balance – he is my friend’s brother-in-law to boot. So I played it by the ear – and asked him what he is planning to do.

The answer was exactly as expected. Since he has already committed Rs. 9 lakhs to the real estate deal, he has to pay further (total committed price is Rs. 18 lakhs more.

Well this HNI with all his direct equities down in the dumps has been partially downsized. He has been given a 6-month notice pay (damn lucky!) and he is looking for a job.

The other choice was to take a 35% cut in salary – he is still undecided on what to do. He is very ANGRY that the portfolios are down. He had committed to a 3 bhk in South India – and he found out that in the last 18 months prices have FALLEN by about 5% – which means his exit is TOUGH.

His investment in his house in Mumbai was not really too much to talk about and he needs a bigger house. Wife is not earning, one kid is in college in India and one kid is studying abroad.

HNI or former HNI? Of course the adviser to be blamed – but hey which adviser?

What all he did wrong:

– Never ever LEVERAGE to invest
– the Real Estate PMS in instalments is a leverage of sorts. If you do not pay the amount in full, the money paid is LOST. In a SIP if you do not pay the instalments you do not lose what you have paid.
– Life style should be within a replaceable salary. If you have jumped from a salary of Rs. 25 L to Rs. 40 L – learn to live on Rs. 25L and use the 15L to build a cushion, repay loans, etc. Using that to leverage further is suicidal.
– Not only did he leverage his PMS, he also leveraged to buy a RE in south India.
– had kept a few million with an ILLEGAL money lender – luckily got back half his money.

Suicide is voluntary. Going from being well paid and rich to a life of penury is also optional. This guy chose it.