Ah, to be among the super-wealthy. Who hasn’t, at one point in their lives, dreamed of whiling away the time on a private yacht, circling some Mediterranean island, popping champagne off the stern? Or, at the very least, who hasn’t imagined living comfortably into retirement, with a nice big house and a sizeable nest egg to pass on to your children.
The former example here represents the idealized, Hollywood version of the very wealthy, while the latter example is probably closer to the truth. Sure, there are glitzy, playboy-style multi-millionaires out there, but the vast majority of very rich people make – and keep – their money through a mix of financial responsibility, knowledge of bonds and stocks, and choosing the right wealth management companies to work with. So, before you go blowing your money on the latest get-rich-quick scheme, read these real secrets of the very rich.
Being Frugal
Ever since last year’s New York Post article about the frugal habits of rich people, much has been made of these penny-pinching techniques. Intuitively, it makes perfect sense: instead of spending extra, small amounts of money on various things, invest that money and watch it grow exponentially. This thriftiness may be cultural, born out of a social drive to preserve personal wealth, but there’s no denying that it works!
Generating A Passive Income
Here’s another buzzword for you: “passive income”. While most people are content to make an active income – that is, money made through work – rich people also make their money through gains from stocks and bonds, real estate income, royalties, etc., all examples of passive income. Generating multiple revenue streams ensures that there is more security in your income and that your wealth has a chance to grow.
Using A Private Wealth Manager
For those readers picturing a wealthy person poring over their own personal finances, singlehandedly devising investment funds and a portfolio – think again. The ultra-wealthy tend to find a private wealth management firm and outsource the decision-making to the investment professionals. These wealth management firms can be found through word of mouth, or by consulting with a wealth management service that screens and vets quality wealth managers.
Taking Your Time
“Time, not timing” is an oft-heard mantra of the very rich. What this means is that, counter to the assumption that one has to pounce on the stock market when the timing is right, you should instead rely on time and compound returns to do the work. According to years of historical stock-return data, it seems that the ability to hold onto investments for the long-term trumps the attempts to track the moves of the market. Of course, this is an area where the ultra-rich might defer to their wealth managers for advice and guidance.
Though these may not seem like the “juiciest” secrets out there, regarding the very wealthy, they rank among the most realistic. If you want to grow your wealth in a similar fashion, start saving, be more frugal and enlist the help of a wealth management service.
