India's rich don't seem to be saving enough. Here's why it makes perfect sense.

Mint

19-07-2025

The recent Dun & Bradstreet India survey, conducted with Marcellus Investment Managers, has sparked considerable debate in wealth management circles.
The numbers are striking: 43% of India's high-net-worth individuals (HNIs) save less than 20% of their post-tax income, and a significant portion don't have sufficient emergency cash.
For those not familiar with HNI finances, these findings may appear counterintuitive—even troubling—given their wealth. But having worked closely with affluent families for years, I believe the data reflects a more nuanced reality than simple financial imprudence.
Beyond traditional saving metrics
To understand why HNIs appear to be 'under-saving", we must redefine what savings mean in the context of substantial wealth. Traditional saving advice, built around salaried individuals, is inadequate when applied to those with complex financial ecosystems. The definition of HNIs used in the many surveys and reports may differ from that used by wealth managers or multi-family offices.
What sets HNIs apart
Traditional personal finance frameworks—designed around salaried individuals—do not apply when portfolios spanoperating businesses, real estate, private equity, and public markets.
HNIs operate in a fundamentally different financial landscape. Unlike traditional savers, who prioritise cash accumulation, HNIs focus on deploying capital efficiently. Every rupee sitting idle represents an opportunity cost, particularly given their sophisticated understanding of risk-adjusted returns.
Another reason why traditional metrics under-represent HNI savings is that much of their wealth is held outside personal balance sheets, embedded in trusts, holding companies, limited liability partnerships (LLPs), and offshore entities. These structures are designed not just for tax efficiency but for succession planning, regulatory clarity, and investment agility.
As a result, what may appear as low personal liquidity or savings is often capital strategically parked within investment vehicles that allow faster, tax-optimised decision-making. Wealth in these structures can be invested in private deals, real estate special purpose vehicles (SPVs), or pooled vehicles, offering both insulation and strategic advantage.
Conventional savings thus take a backseat to more dynamic wealth management strategies.
The strategic use of debt
Perhaps the most misunderstood aspect of HNI financial behaviour is their relationship with debt. While most retail investors see debt as a financial liability but for the wealthy, debt is a strategic asset—used to amplify returns, manage liquidity, and unlock tax efficiency.
Consider a successful entrepreneur operating in the highest tax brackets. For such individuals, interest-bearing debt can provide immediate tax benefits while preserving capital for higher-yielding opportunities. When their business generates substantial returns, or when private market investments offer superior risk-adjusted returns, servicing debt at prevailing market rates becomes a calculated arbitrage play.
This leveraging strategy extends beyond simple tax optimisation. HNIs frequently use debt to maintain liquidity without disturbing their core investment positions. Rather than liquidating appreciating assets to meet cash requirements, they borrow against these holdings, preserving long-term wealth creation while addressing immediate needs. The idea is simple: borrow against appreciating assets while they continue compounding.
What matters most is how this debt is structured and secured. HNIs typically take on debt against appreciating assets—real estate, securities or business equity—rather than unsecured consumer debt. This secured positioning, combined with multiple income streams, fundamentally alters the risk profile.
Cash flow complexity and emergency fund realities
Instead of traditional emergency funds, HNIs typically maintain emergency liquidity through credit facilities, securities-backed lines of credit, or quick-liquidation investment positions. These structures provide immediate access to substantial capital without the opportunity cost of holding large cash balances.
The portfolio integration approach
Debt is just another asset class, one that generates tax benefits and frees capital for higher-return opportunities. The optimisation occurs at the portfolio level, where the combined performance of assets, liabilities, and tax strategies creates superior risk-adjusted outcomes.
For instance, an HNI might maintain a mortgage on their primary residence despite having enough cash to pay it off. The mortgage interest provides tax deductions, while the preserved capital is invested in appreciating assets or growth businesses, generating significantly higher returns. The net effect often exceeds what traditional debt reduction can achieve.
Risk management in complexity
HNIs must maintain full visibility into their financial ecosystem, understanding how various components interact during different market conditions.
The real risk isn't leverage—it's misaligned liquidity. While leverage can enhance returns, mismatched liquidity profiles can force selling during market downturns. Successful HNIs maintain diversified liquidity sources and avoid concentration risks. This requires continuous monitoring and periodic rebalancing. HNI financial strategies must therefore remain adaptable while maintaining structural integrity.
The path forward
The D&B survey findings highlight important considerations for HNI wealth management. The key lies in distinguishing between strategic leverage and excessive risk-taking. The focus in this case should shift from traditional saving metrics to comprehensive wealth optimisation.
Rahul Bhutoria is director and co-founder, Valtrust.