HNIs or high net-worth individuals (HNIs) belong to the financial services sector where a class of individuals has an investible surplus of more than Rs 5 crore, below this threshold. Such investors are categorised as retail as they are measured by their net worth in the financial industry.
Net worth is an amount by which assets exceed liabilities.
Generally, HNIs are widely defined as people whose investible assets such as bonds and stocks exceed a certain amount. A high-net-worth individual is a person who owns liquid assets including money held in brokerage accounts or banks, and excluding assets like a primary residence, durable goods or collectibles.
HNIs are always in high demand by private wealth managers because it takes a good amount of work to preserve and maintain such assets. The more liquid assets held by an individual, the more appealing an HNI becomes to wealth managers, given they earn money equal to a percentage of the total assets they manage.
What is an investible surplus?
The extra amount of money that an individual has for investment in appreciating assets is known as 'investible surplus'. In fact, investible surplus does not include investments made in real estate and excludes any assets acquired without the expectation of getting returns from it. For example, a person's residence, personal assets, cars or farmhouse, cannot be considered under the ambit of investible surplus.
Basically, if an individual has a house worth Rs 5 crore, bank fixed deposits worth Rs 1 crore, and a car worth Rs 50 lakh, then he or she is not an HNI. Even though his or her overall net-worth including the house and bank deposits is more than Rs 6 crore, but the investible surplus is only the Rs 1 crore fixed deposit.
Types of HNIs
High-net-worth individuals (HNWIs): Investors who own liquid assets valued between Rs 5 lakh and Rs 5 crore
Very-high-net-worth individuals (VHNWIs): Investors who possess liquid assets valued between Rs 5 crore and Rs 25 crore
Ultra-high-net-worth individuals (UHNWIs): Investors who own more than Rs 25 crore in liquid assets
