How the wealthy protect their wealth, while the middle class fails: CA shares cheat code to survive market shifts

Why do the rich stay rich — through recessions, inflation, and market crashes — while the middle class often ends up losing ground? Chartered Accountant Nitin Kaushik recently broke down what he calls “The Greatest Wealth Cheat Code Nobody Talks About.”

It’s a simple, entirely legal three-step playbook that the wealthy use to build generational wealth — while the middle class keeps working hard, saving harder, and paying the highest share of taxes. The strategy? Buy. Borrow. Die.

It may sound provocative, but this framework, Kaushik explains, lies at the heart of how rich families preserve and grow wealth across decades without selling assets or eroding capital to taxes.

Step 1: Buy assets

“The middle class follows a pattern — Earn → Spend → Save — usually in fixed deposits or savings accounts,” Kaushik says. The problem is, post-tax FD returns of about 5% barely keep up with inflation, meaning your wealth shrinks in real terms every year.

Wealthy families, however, operate differently. They channel earnings into assets that appreciate faster than inflation — real estate, equity, businesses, even art. These assets compound in value over time.

Take, for instance, a Rs 1 crore flat bought in 2000 that’s now worth Rs 5 crore or more. That’s compounding — and that’s how the rich make time their greatest ally. “You can’t save your way to wealth,” Kaushik says. “You have to own appreciating assets.”

Step 2: Borrow, don’t sell

When middle-class investors need money, they sell — triggering taxes. Selling property or stocks means paying up to 20% in capital gains tax. The wealthy never sell. They borrow against assets.

“Loans aren’t income, so they’re not taxed,” Kaushik explains. “And in many cases, even the interest is deductible.”

For example, a Rs 10 crore property can secure a Rs 4 crore loan at about 8% interest. That’s tax-free liquidity while the property continues to grow in value.

The logic scales beautifully. Imagine someone with Rs 50 crore worth of assets borrowing Rs 10 crore for expenses. They live well without selling anything, avoid income tax, and their assets still appreciate. At a 10% growth rate, that Rs 50 crore becomes Rs 130 crore in 10 years — even while funding a luxurious lifestyle.

This is what Kaushik calls “funding your life through leverage” — a principle few middle-class savers understand but the wealthy live by.

Step 3: Die smarter

Here’s the masterstroke. When you pass away, your heirs inherit assets at current market value, wiping out earlier capital gains. This concept, known as a step-up basis abroad, applies similarly in India since inheritance is not taxed.

Suppose you bought a property for Rs 10 crore and it’s now worth Rs 40 crore. You borrow Rs 15 crore during your lifetime and enjoy it tax-free. Upon your death, your heirs inherit the property at Rs 40 crore — with zero capital gains liability.

The outstanding loan is settled through insurance or partial sale, and the rest of the wealth stays intact.

End result: Rs 15 crore enjoyed in your lifetime, Rs 40 crore passed to heirs, and Rs 0 lost to taxes — preserving Rs 55 crore of family wealth.

Real takeaway

Kaushik emphasizes that this isn’t a billionaire’s secret — it’s a strategy already used by doctors, entrepreneurs, and landlords through home equity loans, business financing, and collateralised lending on shares. The foundation, he says, rests on three essentials: owning appreciating assets, practicing smart tax planning, and maintaining long-term patience.

“Money isn’t about how much you earn,” Kaushik concludes. “It’s about how little you lose to tax and inflation.” While the middle class follows the predictable cycle of Earn → Save → Retire → Die, the wealthy play by a different rulebook — Buy → Borrow → Die → Repeat. The effort may be the same, but the mindset and outcomes are worlds apart.