Why should HENRY individuals invest?


  • High earners not rich yet or HENRY are individuals with a significantly higher income and the potential to be wealthy in the future but are not rich.
  • High earning individuals but low on wealth- this is the problem with HENRY individuals.
  • HENRY individuals must cut down on their spending on consumption expenditures and instead increase savings and investments.

High earners not rich yet or HENRY are individuals with a significantly high income and the potential to be wealthy in the future but are not rich. However, they tend not to have savings. HENRY individuals are plagued by spending highly on consumption expenditure and not practising saving or investment. They often have a six-figure salary, but they feel like they are like the regular people who live hand to mouth.

Investing Tips for HENRY

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What is problematic about Henry individuals?

High earning individuals but low on wealth- this is the problem with HENRY individuals. Their incomes are very high; however, their net worth is often low. This is because their consumption spending on non-income generating expenditures like vacations, expensive cars, luxury watches, and branded clothes is so high that they have no scope to park the money in income-producing assets like real estate or share market or mutual funds.

How can HENRY individuals help themselves?

Here are some tips that HENRY individuals can follow to come out of their non-rich status and feel content about earning well.

  • Move to a cheaper living setup.

The location where an individual chooses to stay has a significant impact on their wealth accumulation potential. This is because the cost of living is highly impacted by the place where one lives. This can be seen in terms of rent or taxes in general. For instance, when a HENRY individual can move from a Metro city to a smaller city, the rent saved can be diverted towards savings or parked in investment that can fetch returns in the future. While moving is not an option for everyone, it is a major cost cut, and anyone who can possibly work remotely or can obtain a transfer to a lower cost place must consider this option. In addition, a lower cost of living can often imply a lower debt because it means lower credit card bills and lesser personal loans to meet regular expenditures.

Why should HENRY individuals invest?

  • Tax savings

As the name suggests, HENRY individuals have a very high income. As a result, they are prone to higher tax payments in states where the tax brackets are higher for the higher income groups. The individuals can reduce the tax burden by contributing to funds that can save them from taxes. This could be any type of funds that is tax-deductible in some states, like a retirement fund or pension fund. Currently, many locations are also offering tax deductions on environmentally friendly constructions- these are called energy-efficient tax deductions. For instance, the installation of solar panels on rooftops of the houses is a tax-deductible expense in several places.

  • Repaying the debt

HENRY individuals have a heavy debt load on their shoulders. They prefer luxury brands and costly accessories, which eat into a major part of the incomes. As a result, they often have high credit card bills and even personal loans which are taken not for any income generation but only to meet their consumption needs. Thus it is essential for them to repay the debt in the process of wealth creation. One can cut short on luxury expenses by taking small steps like adopting annual vacations instead of bi-annual vacations or domestic vacations over an international vacation. Leaving these expenses leaves a significant amount of liquid in the hands of individuals to repay the existing loans and escape taking new loans.

HENRY individuals must focus on investments

HENRY individuals have a habit of high spending. Only through a gradual weaning off can they get into a habit of saving or investing. They can start setting up a Systematic Investment Plan (SIP) with small amounts in mutual funds. Seeing their hard-earned income getting compounded will motivate them to continue with this habit. Depending on their goals and time availability, they can opt for different schemes like contra funds, value funds, small, large or mid-cap funds, dividend yield funds etc. This is for long term perspectives.

For earning returns in the short run, HENRY individuals can invest in shares of companies such that their total shareholder returns can be maximised. Sound dividends and capital gains can be ensured by assessing the fundamentals of companies.

Since investors HENRY individuals lack time to manage their investments actively, they can choose options like Exchange Traded Funds (ETFs) which are passive investment vehicles.

Real estate is another investment avenue that HENRY investors can consider. However, the returns are uncertain. Also, the cost associated with mortgage loans is very high in the form of interest payments.

They should build their savings and investment portfolios so that their future expenses and retirement funds are taken care of.


It is easy for HENRY individuals to come out of their not rich feeling and become wealthy. It is just a matter of changing the habit from only spending to spending, saving and investing.

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