We live in a world dominated by several rich individuals. From the famous owner of Amazon, Jeff Bezos, to the loved Elon Musk, Mark Zuckerberg, Bill Gates, and the Bernard Arnault Family, these individuals combined have the wealth to buy a country and still not go broke. With the amount of wealth these individuals control, one might have several concerns. One of those concerns, if you share the same thought as mine, is how these people protect the billions of dollars they have.
The wealthy protect their money via several means which include financial planning, real estate, collectibles, cooperate stock, farmland, and precious metals. Using these mediums, the wealthy protect and store their money for future generations.
If you are as rich as some of the men and women on the coveted Forbes richest list, you will have four major concerns. These concerns are: how to spend your money wisely, how to prevent your beneficiaries from paying huge taxes after your passing, how to grow your wealth further, and most importantly, how to protect your money. Many wealthy individuals often have sleepless nights thinking of how to protect their money. They hire the best financial planners to help them safeguard their money, and leverage other options. I have highlighted a few of these options below.
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How Do the Wealthy Protect Their Money?
The rich are fascinating kinds of people. How they plan, amass wealth, spend their money, and grow their business is something you may want to keep an eye on. Who knows, you may learn one or two things from them.
Not all wealthy people out there made their money. Some inherited their wealth from their wealthy descendants, such as their grandfather, great grandfather, or a relative in their linage.
Considering such a scenario, you may be intrigued about how the rich protect their wealth and pass it down to future generations. In this article, I’ll try as much as possible to quell your curiosity by highlighting some effective ways in which the reach people protect their money.
Proper Financial Planning:
It shouldn’t be a surprise that this is first on the list. It doesn’t matter how well the wealth has grown in a generation. Without adequate planning, the wealth could be lost in future generations to stringent tax laws, high professional fees, poor investments, including unprepared recipients of the wealth.
To ensure that this doesn’t happen, the wealthy often drafts proper financial plans with the help of professional financial experts like myself. The financial expert suggests various wealth protection tactics to the client based on their situation. They help clients create a road map that indicates how their wealth should be managed and invested for future generations. Of course, as you would have expected, the plan often comes with tax planning techniques to reduce the effect that taxes have on wealth over a generation.
Real Estate:
For several years people have been using real estate to safeguard and grow their wealth. This asset class is one of the better time-tested investments designed to transfer wealth down to several generations.
Real estate can come in several forms: land, residential housing, air space, mineral, water or fishing rights, commercial or industrial properties, etc. What makes real estate a unique asset class is that it is equipped with all the markers for a generational wealth asset.
Real estate is also an amazing hedge against inflation. It reels in income. It is quite suited for generational wealth transfer, thanks to favorable US tax laws. It is an asset that will always be in demand since individuals need somewhere to lay their head.
Precious Metals:
Precious metals are another effective method used by the rich to protect their money. This wealth protection tool has been used by the wealthy for more than 2000 years. Gold and silver are an integrated part of several cultures worldwide as a form of money or storage of wealth. While gold and silver have technically become unassociated from all fiat currencies over the past decades, they are still considered money by many individuals irrespective of how their respective governments perceive them.
Collectibles:
Many wealthy individuals protect their money with collectibles. Collectibles is an item that either currently has value as a collectible or will have greater future value as a collectible item. There are several types of collectibles. In fact, it is safe to say that the list is limitless.
Major Collectibles are paintings, artwork, stamps, vintage wines, coins, rugs, cars, etc. Many of the collectibles purchase by wealthy families are already deemed valuable. Thus, it is not necessarily speculation of future value.
Farmlands:
Here is another amazing asset that wealthy families have invested in over many centuries. This also falls under the real estate category. However, farmland has some characteristics which other assets in the list lack.
Like timberland, farmland isn’t subjected to inflation. It has a low correlation to other assets, historically provides reasonable performance, and it well managed can last for several generations. In addition, farmland can also be used for a sustainable living if required.
Irrespective of the political and economic climate, well-maintained farmland can provide for a family as long as needed. While it is improbable that a farm is required to thrive in this technological era, it provides a sense of security to a family so that if other sources of income fail, there will always be something to fall back on.
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Where Do Rich People Keep Their Money?
Wealthy individuals have lots of money. We aren’t talking of their physical assets like their cars, house, jewelry, etc. We are talking about cash, which amounts to millions of dollars. If one of those wealthy men has such an amount of money, where do you think it is being kept?
Like you, some wealthy people keep their money in banks. If their money isn’t in the bank, then it is making money for them. Wealthy individuals invest in stocks, oil drilling, municipal bonds, real estate investment trust, private companies, partnerships and many other things.
You must note that most of the wealthy individuals out there don’t save. Instead, they invest, and that is why they often become wealthier.
