The number of wealthy Indians and their affluence is expected to rise 88% over the next five years, according to a survey by IIFL Wealth Management and the U.K.-based Wealth-X. As of 2016, India had 284,140 dollar millionaires with a combined wealth of ₹95 lakh crore; by 2021, the figure is likely to reach ₹188 lakh crore, said the report titled IIFL Wealth Index 2018, released earlier this week. IIFL Wealth Management is one of India’s biggest wealth management firms, advising over ₹1.4 lakh crore in client money.

The report was an outcome of an extensive survey conducted in early 2017 of 500 high net worth individuals (HNWIs) across India; each had personal wealth of ₹6.5 crore or more (approximately $1 million or more).  The participants were analysed into three key groups based on net worth: HNWIs (with net worth of ₹6.5 crore to ₹65 crore), VHNWIs (very high net worth individuals, with wealth of ₹65 crore to ₹200 crore) and ultra HNWIs or UHNWIs (with net worth above ₹200 crore). It further used other secondary data and company filings to extrapolate the data to arrive at the overall number of wealthy individuals and their net worth, a methodology which Wealth-X specialises in to provide intelligence and market research on UHNW and HNW individuals across the globe.

“Our research methodology in India used bottoms up approach where we actually contacted several hundred high net worth individuals before we arrived at the conclusion about their behaviour and likely investment practices,” says David Barks, research director (customer research) at Wealth-X.

According to the report, though India will rank No.4 in the number of HNWIs added in the next 5 years after the U.S., China and Japan, it will rank only 10th in terms of percentage growth in wealth during the same period. Several emerging countries like the Philippines, Argentina and even Bangladesh will pip India in terms of percentage growth of wealth, according to the report.

India’s UHNWIs number just 4,470, while its VHNWIs stand at 12,460. However, the small number of UHNWIs who represent 1.6% of the HNWIs account for 42% of the wealth, while VHNWIs account for 14% of the total wealth. Says Barks: “In India, the total number of UHNWIs, which form the core audience of global wealth management firms, is still small compared to say the U.S. or Japan.”

The study throws up several facets of the Indian wealth business that confirms, despite the optimistic outlook, it’s still nascent. First, investments are not diversified across asset classes. Much of the wealth of the VHNWIs and UHNWIs are invested in their primary business. Among UHNWIs, one in five held more than half their wealth in their own business. The rich also preferred to make their money work harder by putting them into investment funds, followed by equities and fixed income. Investment funds made up almost 31% of the assets held by this set of rich and 84% had at least some of their fortune in these funds.

The research found that 28% of India’s richest individuals felt that they were over-invested in real estate, while 31% felt that they were under-invested in other businesses. Despite a high proportion of their surplus being in investment funds, 27% felt they were under-invested in equities.

In the next 12 months, the study found that more than 45% wanted to increase their allocation to investment funds, equities and alternate investment funds. Says Yatin Shah, co-founder and executive director, IIFL Investment Managers, “In India, we have a big set of clients who have seen an event of liquidity on account of divesting their business. This will accelerate as we see more divestments on account of the bankruptcy code.”

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.