A discussion on the book “Unlocking Wealth: Secrets to Getting Rich at any Age” was organised on January 21, 2025, at the Madras Management Center. Chandu Nair, Entrepreneur, Advisor & Facilitator, was in conversation with Rohit Sarin, Author & Co-Founder of Client Associates, and Nagappan V, Founding Trustee of the Foundation for Financial Freedom, Independent Director at Sasvitha Home Finance Ltd, and Past President of the Hindustan Chamber of Commerce.
Rohit Sarin: I believe the next 10 years could be India’s best in this century. Our economy is growing at an average of 6-7% annually, with inflation around 5%. This means, in nominal terms, our GDP is growing at approximately 11-12% annually. Compounding this growth over 10 years will triple our GDP.
When a country grows, it creates opportunities. Some businesses will grow 4x, others 5x, and outstanding ones even 6-7x in this period. This growth phase will generate jobs and affluence in society. I felt it was the right time to share my 25-year journey as a wealth entrepreneur. I’ve learned valuable lessons from India’s wealth creators that I believe every Indian should know.
Historically, wealth creation in India was seen as a negative pursuit. However, if we are to become wealthy, we must embrace wealth creation. With the market expansion, every business has the potential to grow significantly in the next 10 years. My book has three parts:
Why Wealth?: This section explains why wealth is important for individuals, societies, and countries, supported by global data and anecdotes. Laws ofWealth Creation: Here, I share principles I’ve learned from India’s finest wealth creators, which are relatable and implementable; and Protecting and Growing Wealth: This section discusses how to safeguard and continue growing the wealth you create. It emphasises that our individual wealth contributes to the national wealth.
Chandu Nair: Many clients create wealth, but many struggle with it. Is it because of a scarcity mindset or circumstances? What exactly creates the mindset of abundance?
Rohit Sarin: We live in a middle-income country with a per capita income of around $2,700. Despite this, there are inspiring case studies of people from humble backgrounds becoming some of the richest families in India, like Mr. Dhirubhai Ambani. Wealth creation starts with a mindset. If you believe you can’t create wealth, you won’t. But if you decide to be a wealth creator despite your circumstances, you will be. It begins with a thought, which leads to an idea, action, and ultimately destiny.
Chandu Nair: You have a mission to improve financial literacy. What are the stumbling blocks people in India face in understanding money and creating wealth?
Nagappan: Two main factors are mindset and the ecosystem. There’s often a mental block that people can’t understand numbers. In certain regions of India, people are involved in business and wealth creation even in high school or college. The second reason is the purpose of creating wealth. Some people create wealth for themselves, while others do it for a greater cause. If people understand these reasons and overcome the mental block on number crunching, it can change their mindset.
Chandu Nair: There’s a fine distinction between hunger and greed. Hunger gives purpose, while greed can be destructive. How does one distinguish between the two and maintain a hungry state of mind?
Rohit Sarin: There’s a fine line between hunger and greed. Hunger is being focussed and driven by your purpose and actions. For example, a passionate doctor is driven by healing people. Greed, on the other hand, is driven by the desire for output and revenue. In the short term, a greedy person may see faster growth, but over time, trust breaks down, and they fall. Staying focussed on your purpose and solving problems for society will lead to sustainable wealth creation. Businesses that focus on solving problems for more people will scale and create wealth. Those focussed solely on profit may compromise their purpose, leading to eventual failure.
Chandu Nair: Many people are employees with fixed incomes and limited time. How can an employee break out of this trap to create wealth?
Rohit Sarin: The basic concept is the same whether you’re running a business or working as an employee—adding value. As an employee, you’re solving problems for the organisation, which compensates you. Building trust with stakeholders and exceeding expectations can make you invaluable, leading to greater responsibilities and compensation. For example, the current Tata Group chairman started from a humble background and earned the trust of stakeholders over decades, eventually leading to his role. This shows that even as an employee, you can create wealth by adding value and building trust.
Chandu Nair: Many people think there are shortcuts to financial success, but usually, the short term results are disastrous. How does one maintain discipline and not be tempted by shortcuts?
Nagappan: It’s challenging but achievable. Hunger is easier to satiate than greed. Greed often comes from comparing oneself to others and wanting to show off. Even top CEOs sometimes fall into this trap. The family system and ecosystem play a crucial role in instilling the right values. It’s essential to focus on ethics and long-term goals rather than short-term gains.
Chandu Nair: How can individuals create a system to generate wealth, even if they have a regular job?
Rohit Sarin: Take the example of a plumber or an electrician. Initially, they earn daily wages, but over time, they can scale by forming teams and taking on contracts. Wealth creation is about adding value at scale. By growing beyond individual contributions and enhancing their ability to serve more customers, they can increase their earnings. This principle applies to any business or individual. Scaling up leads to greater wealth creation.
Chandu Nair: I want to take this question further and include the approach of certain mercantile communities, of which you are a part. How does this mindset impact financial decisions?
Nagappan: In working with self-help groups, we teach financial discipline. For instance, in a small village near Cuddalore, a bank lent money to a women’s self-help group. The bank suggested investing the unused funds in a mutual fund promising 1% per month. When the market declined, the NAV dropped, causing losses. We educate them on avoiding such pitfalls.
Growing up, my father emphasised that “a penny saved is a penny earned plus interest.” Financial literacy is crucial, and it should start young. For example, my father made me handle bank transactions when I was 12. Such lessons are vital for financial responsibility. Many middle-class families protect their children from financial responsibilities, even filling out college applications for them. We need to make them responsible early on. Even if they make mistakes, they’ll learn and grow.
Chandu Nair: I’ve observed that, unlike mercantile communities, most Indians are emotional about money rather than logical. Discussions about money within families often lead to conflicts. How can we encourage rational and logical financial discussions within families?
Rohit Sarin: This is a critical topic. Financial discussions are often avoided in families. Usually, one member handles finances, and if something happens to them, the rest are unprepared. My advice is to involve your spouse and, later, your children in financial matters. This ensures continuity and preparedness. Children should be introduced to financial management once they’re of age and working. Succession planning isn’t just for businesses; it’s essential for families too. More families are opening up about finances, but there’s still a long way to go.
Chandu Nair: In extended families, financial discussions become even more challenging. How can larger families manage these discussions practically?
Nagappan: In large families, the mindset is to listen to the leader, making it somewhat easier. In nuclear families, it’s more challenging. Growing up, we lived a simple lifestyle, unaware of our wealth. This simplicity helped us distinguish between wants and needs. Today, there’s a tendency to justify wants as needs, driven by societal competition. Living simply and focussing on genuine needs can reduce financial strain.
Chandu Nair: What are the common pitfalls in wealth creation and management?
Nagappan: In wealth creation, everything starts with earnings, which require necessary skill sets. Continuous skill development is crucial. Once you earn, managing needs versus wants is vital. Savings should start early, and spending should be controlled. Social pressure and easy access to online shopping make it challenging to save. We have moved from delayed gratification to BNPL or “buy now, pay later,” posing a significant challenge.
Rohit Sarin: The most common misconception is that people believe they cannot be wealth creators. This belief can occur at any age due to various reasons like limited resources or thinking it’s too late. Everyone can be a wealth creator, regardless of their background or stage in life.
Chandu Nair: Many people have a block or inability to figure out how to participate in India’s wealth creation story, especially the middle class with limited disposable income. How can they benefit?
Nagappan: Expenses often expand to fill the available money. The key is to save more by spending less. Financial literacy is crucial, and involving the entire family in financial decisions is important. The middle class can create wealth by prioritising savings and managing their expenses wisely.
Chandu Nair: How can small, regular investments like SIPs lead to significant outcomes over the long term? How can people embrace delayed gratification and maintain discipline?
Rohit Sarin: The motivation for delayed gratification is the benefit of compounding. Warren Buffett is a prime example, with most of his net worth earned after his 60s due to compounding over decades. Historically, recurring deposits in post offices were popular savings instruments in India. The concept is to pay yourself first by saving a portion of your earnings regularly. Over 10-25 years, this accumulation surprises you with substantial growth. For example, at a 15% annual growth rate, your investment doubles in five years, becomes four times in 10 years, and 33 times in 25 years. This compounding effect can make us significantly wealthier over time.
Chandu Nair: In financial literacy, concepts like compounding sound nice, but people struggle with the discipline. How do you convince them to stick with it and see the benefits?
Nagappan: It takes time and conviction. The “fill it, shut it, forget it” approach is outdated due to rapid technological changes. Regular monitoring is essential, but not on a daily basis. Financial literacy programs and resources from regulators like IRDA, SEBI, NCFE, and RBI are helpful. Involving the entire family in financial planning is crucial. Tools like financial calculators can help people realise the importance of saving and goal-based planning. Once they see the benefits, change happens more naturally.
Chandu Nair: Will these strategies work for the new generation, who face different challenges and live separately from their parents?
Rohit Sarin: Understanding that the joint family system had its advantages is essential. Without it, creating a supportive ecosystem becomes more challenging. The new generation must plan for themselves, but financial principles remain the same. Creating a simple lifestyle and focussing on genuine needs rather than wants can help. Establishing a supportive ecosystem, even if it’s not a traditional family structure, is crucial.
Nagappan: The new generation should understand the importance of financial discipline and planning. While challenges may differ, the principles of saving, investing, and managing expenses remain the same. Resources and financial education programs can guide them in building a secure financial future.
Rohit Sarin: The previous generation often worked for government or quasi-government organisations, benefitting from forced savings like PF and pensions. Today’s generation, living independently, lacks this support and must build their own PF corpus. With rising expenses, financial discipline is even more crucial for the younger generation.
Nagappan: Social security is almost non-existent for the middle class in India, making financial discipline vital. The job market has changed, with no guarantees of job security. The current generation is confident and spends more, but this can lead to psychological problems if they lose their jobs and lack savings. Hence, financial discipline is essential.
Chandu Nair: A Swamiji once said, “You spend half your life earning wealth, then spend more than half your wealth trying to get back your health.” Balancing wealth creation with health, family, and social connections is crucial. When does enough become ‘enough’? How do you balance these aspects of life?
Rohit Sarin: Balancing wealth creation with health, family, and social connections requires defining what “enough” means for you. Wealth should be a means to achieve a fulfilling life, not the sole goal. Maintaining a simple lifestyle, focussing on genuine needs, and prioritising health and relationships can help achieve this balance.
Nagappan: It’s important to create an ecosystem that supports you, financially and emotionally. The new generation must understand that financial discipline and planning are essential for a secure future. Resources and financial education programs can guide them in building a balanced and successful life.
Rohit Sarin: There are two important milestones in wealth creation. The first is achieving financial freedom, where you have enough wealth to meet all your needs for the rest of your life. This involves financial planning to determine how much wealth you need for your life goals. The second milestone is creating wealth beyond your needs for philanthropic activities. Wealth creation can be an endless goal, as excess wealth can be used to do good for society.
I’ve had the privilege of knowing many inspiring personalities. One of them is Mr. Ashok Soota, who is now 83 years old. Mr. Soota became an entrepreneur at the age of 68, founding Mindtree and later Happiest Minds. He has never married and has no family. When I asked him about his motivation, he shared that wealth is an endless goal because he is building educational institutions for the weaker sections of society. This wealth will be left in the ecosystem, contributing to a better world. If you have such a goal, wealth creation becomes limitless. God has been kind to you, providing what you need. As long as you are healthy and able, why should you stop being a wealth creator?
Chandu Nair: I met an entrepreneur who divides his wealth into three parts: 1/3 in business, 1/3 in fixed assets, and 1/3 in financial assets. What should be the approach and purpose?
Nagappan: I agree with the first three, but I add a fourth part: charity. Allocating 25% of wealth to each including charity is important. Contributions to society, like building schools and hospitals, create a lasting legacy. The saying goes, “You die twice: once when you actually die and again when the last person who remembers you dies.” Some people leave a legacy that ensures they are remembered forever, like Alagappa Chettiar who built Guindy Engineering College. Knowing your purpose and contributing to society brings a sense of satisfaction.
Chandu Nair: I have 100 rupees today, which is surplus. Where should I invest it, and why?
Rohit Sarin: If you have surplus money that you don’t need for the next 10 years, invest it in a growth asset class like listed equities. Don’t pick stocks yourself. Instead, give it to a professional manager or invest in an index fund. This way, you can benefit from India’s growth story and the hard work of businesses growing at 20% per annum.
Chandu Nair: What if someone doesn’t have a 10-15 year horizon or is risk-averse and doesn’t like equities?
Rohit Sarin: For risk-averse individuals, balancing fixed income and equities based on risk tolerance is essential. However, over the long term, equities tend to outperform fixed income. If you have time, focus on compounding at the best possible rate. Avoid looking at short-term volatility and remind yourself that this is your retirement corpus. This approach helps manage risk aversion.
Chandu Nair: You are an offline stock broker in the age of Zerodha and Groww. What makes your customers stick with you, and how do you ensure they do better than on their own?
Nagappan: We operate a hybrid model with both online and offline services. Our background as stock brokers emphasises ethics and personalised service. High net worth individuals often prefer interacting with trusted advisors rather than solely relying on technology. While online platforms like Zerodha Varsity provide excellent resources, there is still a need for personalised advice in a growing market. The rapid increase in Demat accounts shows significant growth potential.
Rohit Sarin: The classic principles of asset classes apply to crypto as well. These principles revolve around the supply and demand dynamics, which are observable in traditional asset classes like real estate, equities, gold, and fixed income. Each of these asset classes has available data on production, consumption, and overall demand and supply metrics. Crypto, however, lacks such transparency. The supply and demand details are often obscure, making it difficult to objectively analyse and assess. As wealth managers, if we cannot analyse an asset class objectively, we steer clear of it to avoid speculation and associated risks.
Another challenge for crypto is the opposition from central banks. Cryptocurrencies pose competition to central banks and their control over monetary policies. Central banks across the world, including the RBI in India, will not allow crypto to become a mainframe currency due to the potential loss of control over the economy. What’s happening in the US with support from figures like Mr. Trump and Mr. Musk is sentiment-driven. Without concrete data and regulatory support, it’s more speculative than investment-grade. Given these complexities and uncertainties, I advise against investing in cryptocurrencies.
Nagappan: Just to add to that, have you ever thought twenty years back, that the prices of diamond will come down? It has now come down as lab grown diamonds have come. We don’t know if similar thing can happen to gold tomorrow. We don’t know about crypto also. I like Bitcoin, not all the cryptos, but then I don’t trade in it because, it is not at all regulated. Where do I go if I have a problem? There is no absolutely regulation put in place. So it’s very dangerous to trade in crypto. We already have problem trading in something which is regulated. Why do you trade in something unregulated?
Chandu Nair: We are living in a fantastic cusp of a beautiful opportunity in India. For the next 10 years, if we play our cards well, we can potentially see a huge increase in our collective wealth. That collective wealth will be good, not only for ourselves, for our families, for our communities, but also for the nation as a whole.
