Case:
Arvind, an IIT and IIM graduate, had successfully built and sold an outsourcing company to a NASDAQ listed player. He was out of the corporate race for good. Immediately on receipt of the windfall amount, he invested a portion of it in bank FDs and started spraying his investments on a lot of other promising start-ups. Then came the dot-com bubble and all the investee companies had to wrap up their operations leaving his investments worthless.
Depressed by the event and poor post tax return of the Bank FD, he decided to invest the money with a real estate company at a high rate of interest. Duly secured by a property collateral. Then came the unreal-estate downfall and he was able to recover only 40% of his investments. Arvind had to join back the corporate world.
Solution:
Saurabh, Arvind’ brother, was an equally remarkable professional achiever. However, when he sold his company, he immediately approached a wealth management company to manage his large wealth.
We worked with him and at the end of exercise pointed to the fact that he can invest in start-ups too. But only to the extent of 6% of his wealth. Balance 94% will need to be squirrelled away and invested using a more predictable and reliable Middle Path Investment Framework ®.
