Tips for High Net-Worth Financial Planning in India

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Financial planning involves formulating a strategy to manage your finances and assets. However, high-net-worth financial planning is much more advanced and focuses on individuals with a higher amount of wealth. Being an individual with a high net worth, it becomes vital to evaluate individualised challenges while creating an all-inclusive financial plan. 

A financial advisor can assist by providing a strategy to lessen your tax burden, clear debt, and strengthen your investment portfolio, enabling you to reach the next level. To know more, keep reading.

Precisely, high net-worth financial planning signifies the financial planning associated with high-net-worth individuals. These affluent individuals are classified into three categories: high-net-worth persons, very high-net-worth individuals, and ultra-high-net-worth individuals.  

High-net-worth people own liquid assets of $1 Mn or above. On the contrary, very high-net-worth people own liquid assets of a minimum of $5 Mn and a maximum of up to $30 Mn. Finally, ultra-high-net-worth individuals are those who own liquid assets worth equivalent to $30 Mn or above. You will be treated as a high-net-worth individual if you fall under any of these three categories.

In general, high-net-worth persons indulge in more advanced financial planning than the standard one. With the escalations in the value of their investable wealth, it becomes essential to conduct thorough high-net-worth financial planning, investment planning, wealth management, and risk analysis. 

Below are some essential tips high-net-worth individuals need to follow to meet their financial goals:

1. Starting Early

Remember that the more wealth you own, the more challenging it will be for you to manage. Paying income tax, property tax, debt, state tax, estate tax, investment returns, etc., can take time and effort. Hence, you need to analyse each of them minutely by considering your financial position.   

The earlier you take care of these, the easier you will be able to handle your financial situation. Thus, making an upright financial plan initially puts you in a strong position by which you can plan for your future and post-retirement life more effectively. 

Many individuals overlook the idea of making high-net-worth financial planning from the beginning. Consequently, improper financial management can result in overspending, running up credit cards, and eventually make you fall into further debt.

2. Consolidating Assets With a Financial Advisor

Sometimes, many ultra-high-net-worth individuals and their families open too many accounts with different financial institutions to branch out their investments and lessen risks. However, diversification of investment portfolios only causes more misunderstanding. For this, detailed financial planning for ultra-high-net-worth individuals makes sense. 

Consolidating properties and assets under the guidance of an advisor will be helpful for UHNWIs and their families. This helps lower expenses related to managing too many accounts, convenient investment planning, efficient administration, etc.

3. Tax Planning

4. Opting for Life Insurance Plans

Life insurance is useful for the wealthy to maximise their funds and pass on more money to their successors. Life insurance policies can act as an investment tool in addition to being a safeguard. Life insurance is not something that only wealthy people benefit from. However, it provides several benefits for high-net-worth individuals.

Insurance policies can be invaluable to your financial plan, and you might need different types of policies. A financial planner can help you determine what type of coverage you need and how much to protect your home, belongings and your family's financial well-being.

If you are still determining whether you fall under the category of high-net-worth individuals, do calculate your net worth. 

You may apply this formula to determine it:

Net Worth = (TA – TL). 

Here, TA and TL represent Total Assets and Total Liabilities, respectively. You will get the correct net worth value by deducting your total liabilities from the total number of assets. Remember that these values apply only to liquid assets such as cash, bonds, treasury bills, certificates of deposit, stocks, etc., and not to physical assets like buildings, land, machinery, vehicles, etc. 

For instance, if you are the owner of a house worth $4 Million but have only $80,000 in your bank, you will not be treated as a high-net-worth individual. On the contrary, if your bank balance and investments are valued above $1 Million, you will be considered under the high-net-worth category.