What wealthy Indians actually do with money vs. what they tell everyone else to do
Key Points:
• They preach mutual funds, practice PMS and AIFs: Wealthy Indians allocate heavily to Portfolio Management Services, Alternative Investment Funds, and real estate while pushing SIPs to the masses
• The real estate obsession they hide: While telling you “don’t put all eggs in one basket,” ultra-rich Indians still hold 30-40% of wealth in premium real estate and commercial properties
• Access inequality drives the wealth gap: Their “simple” advice keeps you in retail products while they access high-ticket PMS (₹50 lakh minimum) and exclusive AIFs
• The family office advantage: India’s ultra-wealthy run sophisticated family offices with tax-efficient structures while recommending basic ELSS and PPF to everyone else
You’ve heard it a thousand times from India’s financial gurus: “Start your SIP.” “Invest in large-cap mutual funds.” “Don’t try to time the market.” “Keep it simple.”
This advice comes from the same people who have eight-figure portfolios, bestselling books, and prime-time slots on business channels. They’re crorepatis telling you exactly how to build wealth by doing the complete opposite of what made them rich.
Here’s the uncomfortable truth: India’s wealthy have created two entirely different playbooks. One for you, full of simple, low-maintenance strategies that keep you comfortable but never truly wealthy. And one for themselves, packed with exclusive investments, tax structures, and strategies that require crores in capital and connections you don’t have.
The question isn’t whether their public advice works. The question is why they’re not following it themselves.
The Mutual Fund vs. PMS Reality Gap
Walk into any financial planning seminar in Mumbai or Delhi. The message is always the same: “Mutual funds sahi hai.” Start with ₹500 monthly SIPs, diversify across large-cap and mid-cap funds, and wait 20 years for wealth creation.
Solid advice that will absolutely make you moderately wealthy. But here’s what they don’t tell you: Allocations to Mutual Funds, PMS, AIFs, and Gold are anticipated to see modest increases for family offices, with Portfolio Management Services taking up a significant chunk of wealthy Indians’ portfolios.
Let that sink in. The people telling you to put 80% of your money in retail mutual funds are putting the majority of their wealth into PMS and AIFs with minimum investments of ₹50 lakhs and ₹1 crore respectively.
While you’re getting 12-15% returns from mutual funds (if you’re lucky), they’re accessing PMS strategies that can deliver 18-25% returns through concentrated portfolios, sectoral plays, and market timing, exactly the strategies they warn you against.
The reason? You can’t legally access PMS with your ₹10,000 monthly savings. So they steer you toward mutual funds and call it “democratized wealth creation.”
The Real Estate Hypocrisy Indians Love
“Real estate is illiquid,” they say. “Don’t put more than 20% in property,” they preach. “REITs give you diversified real estate exposure.”
Meanwhile, these same financial experts are quietly building massive property portfolios. Indians rely heavily on physical assets like real estate and gold rather than financial assets, and the wealthy are no exception, they’re just smarter about it.
They’re buying prime commercial properties in Gurgaon and Pune, residential complexes in Bengaluru, and land parcels in emerging cities. They understand what they can’t tell you publicly: Real estate isn’t just about capital appreciation in India, it’s about rental yields, tax benefits under Section 24, and most importantly, black money conversion.
But here’s the kicker, they can’t recommend direct real estate investment to the masses because most people don’t have ₹2-5 crores to invest in Grade A commercial property. So they recommend REITs that give you 6-8% returns while their direct properties generate 15-20% IRR.
The AIF and Hedge Fund Club You Can’t Join
This is where the advice gets really disingenuous. Wealthy Indians have access to Alternative Investment Funds (AIFs) and quasi-hedge fund strategies that are literally beyond your legal reach.
AIF Category II and III funds focus on private equity, venture capital, and hedge fund strategies. Minimum investment? ₹1 crore. These investments don’t just have higher potential returns, they have fundamentally different risk-reward profiles and tax treatments.
Private equity funds investing in Indian startups can return 3-5x your money in 3-5 years. Venture debt funds offer 15-18% fixed returns. Real estate AIFs provide access to premium commercial developments that individual investors can never access.
The total wealth held by Indian ultra-high net worth individuals will also grow to over USD 700 billion by 2024, largely because they have access to these high-return strategies while you’re stuck with retail products.
The Tax Strategy They Never Mention
Here’s the part of wealth building that never makes it into popular advice: Tax optimization becomes exponentially more important as your wealth grows in India’s complex tax system.
When you’re investing ₹1.5 lakhs annually to claim 80C deduction, tax planning is straightforward. When you’re moving ₹10 crores annually, tax strategy can save more money than your investment returns.
Wealthy Indians use sophisticated structures: Setting up holding companies, utilizing capital gains exemptions under Section 54EC, creating family trusts, and using offshore vehicles in Singapore and Mauritius. These strategies can legally reduce effective tax rates to single digits.
But they can’t recommend these in mass-market advice because they require massive capital, CA and CS expertise, and risk tolerances most people don’t have. So they stick to recommending ELSS and PPF, perfectly good advice that captures maybe 10% of available tax benefits.
The Family Office Revolution
As the ultra-wealthy population surges, more family offices in India will be established. These aren’t just investment management companies, they’re comprehensive wealth management ecosystems.
Family offices provide access to exclusive deal flow, co-investment opportunities with other ultra-rich families, direct startup investments, and sophisticated estate planning. They can negotiate better terms with fund managers, access pre-IPO opportunities, and structure investments for optimal tax efficiency.
While you’re getting standard mutual fund performance, family office clients are getting customized strategies, exclusive opportunities, and institutional-level service. It’s not just about money, it’s about access to a completely different investment ecosystem.
The Startup Investment Game
Here’s what financial advisors never tell you: Many wealthy Indians made their fortunes through early-stage startup investments, not mutual funds.
They’re angel investors in the next Flipkart or Paytm. They participate in Series A rounds of promising startups. They get employee stock options in unicorn companies. These investments can return 10-100x your money, something no mutual fund will ever achieve.
But they can’t recommend angel investing to someone with ₹50,000 in savings because startup investing requires lakhs per deal, extensive due diligence capabilities, and the ability to lose 90% of your investments while waiting for the 10% that generate life-changing returns.
The Sectoral Play Contradiction
“Don’t try to time sectors,” they say publicly. “Stick to diversified large-cap funds.”
Privately? They’re making massive sectoral bets through PMS and direct stock investments. During the 2020 pharma boom, they loaded up on pharmaceutical stocks. During the current renewable energy cycle, they’re heavily invested in solar and wind companies.
They have research teams, sector specialists, and management access that helps them identify trends months before they become obvious. But recommending sectoral funds to retail investors would be irresponsible because most people don’t have the expertise or risk tolerance for concentrated bets.
What This Means for Indian Investors
None of this means you should ignore their public advice entirely. SIP investing, diversified mutual funds, and long-term thinking will absolutely build wealth. The math works, and millions of Indians have become crorepatis following these strategies.
But understand what you’re choosing: A safe, predictable path to moderate wealth rather than a complex, uncertain path to exceptional wealth.
If you want to move beyond their public advice, start thinking like they do: Focus on tax efficiency first, returns second. Look for exclusive opportunities through portfolio management services once you hit ₹50 lakhs. Build real estate exposure through direct investments, not just REITs.
Most importantly, understand that their “simple” advice is designed for simple goals. If you want to build generational wealth, you’ll need to graduate to their actual playbook.
The Geographic Advantage They Don’t Discuss
Wealthy Indians understand something they rarely mention: Location-based investment strategies matter enormously in India’s diverse economy.
They’re not just buying properties in Mumbai and Delhi, they’re identifying emerging cities 5-10 years before they boom. They invested in Pune when it was still “just another Maharashtra city.” They bought in Hyderabad when it was transitioning from government to IT hub.
Similarly, they use regional mutual funds, state-specific infrastructure bonds, and local business opportunities that never get national media attention. But recommending these requires local knowledge and higher risk tolerance than most retail investors possess.
The Bottom Line
The wealthy aren’t hypocrites for giving different advice than they follow, they’re being practical. Most Indians can’t handle the complexity, risk, and capital requirements of advanced wealth-building strategies.
But recognizing this gap is the first step toward bridging it. Their public advice will make you financially secure. Their private strategies will make you wealthy enough to need family offices and tax advisors.
India is expected to see the fastest growth in ultra high net worth individuals globally over the next few years. The question is whether you want to join that growth or just read about it.
The Indian dream of financial freedom is real, but there are two different roadmaps. Which one you choose depends on how badly you want to move from the audience to the stage.
