Julius Baer Lifestyle Index
May 29, 2012 Leave a comment
The government may publish inflation figures fortnightly,but these are for industrial workers,agricultural workers etc.Inflation obviously varies depending on a persons lifestyle and consumption habits.Have you ever wondered whether there is an increase in the cost of living a luxurious lifestyle?If so by how much?
Now there is a way to answer all these questions.The Swiss Private bank Julius Baer has constructed a Lifestyle Index to capture the rise in price of luxurious living in Asia.
The Julius Baer Lifestyle Index is based on a basket of 20 luxury goods and services that represent discretionary purchases of HNWI in the four major Asian cities: Hong Kong, Shanghai, Singapore and Mumbai. Properties are accorded the highest weight of 30% and cars the next highest weight at 10%.The list does not purport to represent the comprehensive spending patterns of HNWI in the region,but rather an indication of how various items they spend on have risen by. While properties and cars have a combined 40% weight, Julius Baer has given an equal weight for the other 18 items in the index to sum to 60%. Read more of this post
Often people see the SENSEX/NIFTY values,property prices etc. and the GDP as one and the same or as proxies for each other.After all if the economy is good, the GDP and stock indices , property prices etc. are expected to rise.By doing so people are confusing real wealth and paper wealth.This confusion especially happens to people who own stocks.And today an increasing number of people own stocks,if not directly than through mutual funds.Incidentally, even debt mutual funds might have an equity component.In the insurance front, not just ULIPS but also the bonuses in traditional products are dependent on stock market returns.Blended funds in child plans and pensions also have an equity component.So today, many people with no intention of dabbling in stocks still have an equity exposure and are prone to confusing the rise in paper wealth due to valuation gains with a rise in real wealth. 
The world economy is far from the pink of health,but I don’t think that the end of the world ,as we know it, is upon us.However I do believe in having a wealth pyramid in place.If your are coming in late,you can read more about it in an older post here: 
1. Figure out what you’re so passionate about that you’d be happy doing it for 10 years, even if you never made any money from it. That’s what you should be doing.
Many Indians who haven’t been abroad,tend to multiply foreign salaries by the exchange rate, compare them with Indian ones and get suckered into various job offers.However,what is rich and what is wealthy is really relative.It depends on where in the world a person comes from and exactly how well off or not so well off the person might be in his/her own society.
Here is a quiz put together by Robert Frank to help you decide just how transient your wealth may be.Just answer the questions below honestly and tally up your score and read the result from the list at the bottom of the post.
Robert Frank’s new book “High-Beta Rich-How The Manic Wealthy Will Take Us To The Next Boom,Bubble And Bust” is based on interviews with more than 100 people with net worths (or former net worths) of $10m or more. These include the Blixseth family, former billionaires who had to lay off all 110 staff in their enormous residence; the Siegels, who had to abandon the largest private house in the US before it was completed; and Jack Warner, who built a fortune from various business, but ended up a penniless handyman.It is also a tale of how the financial crash of 2008 has affected the US more generally. It includes numerous unemployed former butlers, unoccupied mansions and falling tax revenue for fiscally-pressed state governments. In addition, Frank tells the story of upmarket repo men who specialise in repossessing planes, yachts and the like from indebted millionaires.So basically Frank revisits the lives of the people he profiled in Richistan, and follows up on what has happened to them in the years since he wrote the book in 2006. By 2011, some of these rich people have since gone from riches to rags, or merely to less affluence. His follow up on the people whose jobs it was to serve the needs of the rich shows how many of them are now finding it hard to secure stable jobs from the rich since the 2008 .Since the book with vivid sketches of how the rich, and the formerly rich, really live is a sequel to Richistan, published in 2007, in which he profiled the lives of the rich before the recent financial bust, do read it before starting on this one. 
“Richistan: A Journey Through The 21st Century Wealth Boom and the Lives of the New Rich” is a book by Robert Frank who writes “The Wealth Report,” a Wall Street Journal weekly column and blog.The book is an eye-opening, educational and at times amusing summary of Frank’s years of analysis of the “new rich”.They came to his attention in 2003 when he noticed that statistics from the Federal Reserve Board showed a curious pattern: the number of millionaire households in the U.S. had doubled since 1995 and showed no sign of slowing.
Credit Rating and Information Services of India Ltd. (CRISIL) is India’s leading Ratings, Research, Risk and Policy Advisory Company based in Mumbai .CRISIL pioneered ratings in India more than 20 years ago, and is today the undisputed business leader in India.CRISIL’s rating experience covers more than 45000 entities, including 30,000 small and medium enterprises (SMEs).
