Ever wondered why some families seem to keep growing their wealth across generations while most people struggle with taxes and inflation? CA Nitin Kaushik calls it the “greatest wealth cheat code nobody talks about” — and it’s simpler than it sounds.
BUY ASSETS, NOT LIABILITIES
Most people follow the cycle: earn, spend, save. Savings are often parked in fixed deposits, earning post-tax returns that barely beat inflation. Over time, the value of money actually shrinks.
Kaushik explains, “The key is to buy assets that grow faster than inflation — real estate, stocks, businesses, even art. A flat bought for Rs 1 crore in 2000 could be worth over Rs 5 crore today. That’s compounding in action.”
Instead of saving in cash or low-interest accounts, wealthy families invest in assets that increase in value, creating long-term growth.
BORROW INSTEAD OF SELLING
The middle-class approach often involves selling assets and paying capital gains tax — typically around 20%. The wealthy take a different route: they borrow against their assets. Loans are not considered income, so there’s no immediate tax.
Kaushik says, “Imagine a property worth Rs 10 crore. You could take a loan of Rs 4 crore at 8% interest. You get cash in hand, tax-free, while the property continues to appreciate.”
By using leverage, they fund their lifestyle without triggering hefty taxes and keep their investments growing.
USE LEVERAGE TO FUND YOUR LIFE
Owning appreciating assets gives you the option to borrow rather than sell. For example, someone with Rs 50 crore in assets could borrow Rs 10 crore instead of liquidating investments. Loan interest may even be deductible, and the assets continue to grow.
Over a decade, with a 10% annual appreciation, Rs 50 crore could become Rs 130 crore, all while living comfortably. Kaushik calls this “living luxuriously while your net worth grows.”
DIE SMARTER, NOT HARDER
The final step in the wealth cheat code happens at death. The expert said that in India, inherited assets are not taxed, unlike many other countries where gains may reset for heirs. This is called the step-up basis abroad.
Further, Kaushik explains, “If you buy a property for Rs 10 crore, it grows to Rs 40 crore. You borrow Rs 15 crore during your life and spend it tax-free. When you pass away, heirs inherit Rs 40 crore. No capital gains tax. Your family keeps the maximum wealth intact.”
This strategy allows wealthy families to enjoy large sums in their lifetime while passing on substantial, tax-efficient wealth to the next generation.
CAN ANYONE USE THIS STRATEGY?
Yes, you don’t need hundreds of crores to start, says Kaushik. Professionals like doctors, entrepreneurs, and landlords already do this with home equity loans, business loans against assets, Collateralised lending on shares or mutual funds. He added, “You just need three things: appreciating assets, smart tax planning, and patience.”
Kaushik sums it up: “Most people were taught: earn, save, retire, die. The wealthy live by: buy, borrow, die, repeat. Same starting point, very different results. If you play by old rules, you lose. Learn the real ones, and you’ll protect wealth for generations.”
