High net worth individuals, and folks making their way towards that status, are known for putting their money to work. As anyone who has earned and maintained high net worth can tell you, using your money wisely to both fund your lifestyle and to generate more net worth is a key pillar of a sound financial strategy. The thing is, making your money work for you can be easier said than done. At Delta Wealth Advisors, an experienced net worth advisor can help with high net worth wealth management to assist in preserving your lifestyle and securing your future.
People often ask things like:
- Where do millionaires keep their money?
- How do millionaires protect their money?
- How much do billionaires keep in cash?
All of these questions and more will be answered in the following blog as we highlight a few key considerations for high net worth wealth management strategies.
Where Do High Net Worth Individuals Put Their Money?
High net worth individuals (HNWIs) put their money in a diverse pool of assets and savings to give themselves the best chance at creating more wealth while mitigating their risk. Let’s look at how the wealthy protect their money by investing it broadly.
Typically speaking, all types of HNWIs invest in a variety of assets that vary in terms of risk and reward. Some of these assets types include:
- Physical assets
- Real estate
- Savings accounts
- Small businesses or private equity
- Stocks and bonds
Every individual’s investment strategy will look different depending on their risk tolerance and personal preferences. Keeping that in mind, let’s take a look at each of these investment types in more detail to see how they comprise a more comprehensive wealth management approach.
One of the more fun ways to diversify your investment portfolio is to purchase physical assets that you expect will appreciate over time. This can include any kind of collectors item, such as art, cars, memorabilia, etc. One upside to this is that the value of vintage and collectible items does not tend to fluctuate. However, the drawback can be that these are relatively non-liquid, and finding the right market for selling them can be time consuming and tedious.
Real estate can play a big part in an investment strategy for several reasons. For starters, it is a way to increase your passive income through rental and lease revenue. As such, it is a great investment to assist with cash flow. Real estate can also be used as leverage or collateral in lending scenarios. Other benefits of real estate include its natural appreciation over time, relative stability even during downturns, and its potential tax advantages. It is important to understand that real estate is a type of non-liquid asset, meaning you should plan to own it for a while and try to balance it with other liquid investments in your portfolio.
While savings accounts are not typically considered a glamorous investment, they do make up an integral part of a wealth management plan. For starters, they do earn some interest. But beyond that, they make up for their low yields in other ways. For HNWI, wealth management should consist of more than just planning for the future. It should also incorporate a plan for enjoying your current lifestyle and having the flexibility to handle whatever life throws at you. A savings account can allow you to live how you want and also provide you with cash on hand to resolve emergency situations or unforeseen circumstances.
Small Businesses or Private Equity
Investing in a small business or private equity opportunities comes with fairly high levels of risk and reward. You can simply be a silent investor, or you can take the role of a strategic partner. Either way, you have the chance to earn extremely high yields while investing in industries that actually interest you. The downside, however, is the risk of the business failing and losing all of your capital.
Stocks and Bonds
The simplest way to diversify a portfolio is by investing in stocks and bonds. Inherently, stocks are a bit riskier with the prospect of higher returns, while bonds are a stable low-risk investment without the promise of highly lucrative returns. Investing in the public sector allows you to pick and choose which specific companies are appealing to you and can create truly customized asset allocation. Conversely, the public market is subject to fluctuations (sometimes to the extreme) and can be hard to predict.
Delta Wealth Advisors…Wealth Management for Today and Tomorrow
At Delta Wealth Advisors, we know how hard you have worked to earn your high net worth and how important it is to preserve and grow. With many years of experience doing exactly that, the advisors at DWA can help you gain clarity around every aspect of your wealth management plan. Together, we can reach your goals through our holistic approach. To learn more about our fee-only, commission-free, financial planning and tax services, head over to our website. And if you are interested in learning more about us or getting started, schedule a call today!