When someone becomes wealthy, such as through a successful family business or by working for a company that goes public, they can often assume all their problems will disappear now that they’ve “made it.” But when you have a family, the various needs, wants, and opinions of different family members can rise to the surface over time, and the issue of transitioning the wealth to the younger generation may prove complicated. In fact, it’s fairly common that family businesses and their consequent wealth don’t last past the third generation.
So, how can you change that? How do wealthy families stay wealthy?
Here are the top 10 things wealthy families do to stay wealthy. It can take hard work and a group of trusted advisors like CPAs and financial planners to stay the course. We hope you find these strategies helpful.
1. Invest in Diverse Portfolios
Wealthy families often have a diverse range of investments, including stocks, bonds, real estate, and alternative assets like hedge funds and private equity. This helps to spread risk and ensure that the family’s wealth is not overly reliant on any one investment. They know that concentration can create wealth, but diversification is the prudent way to preserve wealth.
2. Manage Their Money Wisely
Making informed decisions, especially about your finances, is important. Wealthy families often have a team of financial advisors and accountants to help them manage their wealth and make informed financial decisions. This may include setting financial goals, creating budgets, and making smart investments.
3. Save and Budget
Even wealthy families can’t always rely on their income alone to maintain their wealth. Many successful families prioritize saving and budgeting in order to set aside funds for the future and prepare for financial setbacks.
4. Educate Themselves
Wealthy families often place a strong emphasis on financial education. This may involve educating themselves about investment opportunities, learning about new industries, or staying up to date with financial news and trends.
5. Pass on Wealth to Future Generations
Who doesn’t want to preserve their wealth and the hard work that went into making it? Wealthy families often work to ensure that their wealth is passed down to future generations. This may involve creating trusts, estate planning, and educating younger family members about financial management.
6. Foster a Culture of Hard Work
Many wealthy families believe that hard work and determination are key to staying wealthy. They may encourage family members to take on challenging careers and responsibilities and to always strive for excellence.
7. Practice Philanthropy
Wealthy families often use their wealth to give back to their communities and make a positive impact on the world. This may involve supporting charitable causes, starting foundations, or participating in philanthropic efforts.
8. Take Calculated Risks
While it’s important to be cautious with money, wealthy families also understand that taking calculated risks can lead to great rewards. They may be willing to take on investments or business ventures that have a higher level of risk, as long as they are well-informed and have a solid plan in place.
9. Stay Organized and Plan Ahead
Wealthy families often have a clear plan in place for managing their wealth and making financial decisions. This may involve setting long-term financial goals, creating budgets, and keeping track of their investments and expenses. They know planning can reduce taxes, which can be a source of wealth erosion.
10. Seek Out Opportunities for Growth
Wealthy families often have a growth mindset and are always on the lookout for opportunities to increase their wealth. This may involve expanding their businesses, investing in new ventures, or seeking out new investment opportunities.
Take action now to secure your family’s wealth for future generations. Delap Wealth Advisory specializes in helping maximize the after-tax, risk-adjusted financial outcomes our clients experience. Reach out to our team today to start a conversation.
This blog is for informational purposes only. It should not be retransmitted in any form without the express written consent of Delap Wealth Advisory, LLC, an investment advisor registered with the United States Securities & Exchange Commission. The contents of this communication should not be construed as investment advice intended for any particular individual or group of individuals. All information, statements, comments, and opinions contained in this blog regarding the securities markets or other financial matters is obtained (or based upon information obtained) from sources which we believe to be reliable and accurate.However, we do not warrant or guarantee the timeliness, completeness, or accuracy of any information or opinions presented herein. Any historical price or value is as of the date indicated. Information is provided as of the date of this material only and is subject to change without notice.
Investing in securities involves the risk of loss, including the risk of loss of principal, which clients should be prepared to bear. No assurance is given that the investment objectives of any investment described in this communication will be achieved. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. The information contained in this blogis not intended as tax or legal advice, and Delap Wealth Advisory, LLC, does not provide any tax or legal advice to clients. You should consult with our firm or other independent financial, legal, and/or tax advisors before considering any investment or participation in any investment program.
As a seasoned financial expert with extensive experience in wealth management and advisory services, I've had the privilege of working with high-net-worth individuals and families, offering them personalized strategies to preserve and grow their wealth. My expertise stems from years of hands-on involvement in diverse financial landscapes, collaborating with a team of professionals such as Certified Public Accountants (CPAs) and financial planners to navigate complex financial scenarios.
Now, diving into the content of the article, let's break down the key concepts and strategies wealthy families employ to sustain and pass on their wealth:
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Invest in Diverse Portfolios: Wealthy families understand the importance of diversification. By investing in a range of assets, including stocks, bonds, real estate, and alternative investments like hedge funds and private equity, they mitigate risks and avoid overreliance on any single investment.
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Manage Their Money Wisely: Informed financial decisions are crucial. Wealthy families often assemble a team of financial advisors and accountants to guide them in managing their wealth, setting financial goals, creating budgets, and making intelligent investments.
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Save and Budget: Regardless of their wealth, successful families prioritize saving and budgeting. This financial discipline allows them to build a financial cushion for the future and navigate potential setbacks.
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Educate Themselves: Wealthy families place a strong emphasis on financial education. Staying informed about investment opportunities, industries, and financial trends is key to making sound financial decisions.
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Pass on Wealth to Future Generations: Ensuring the continuity of wealth involves proactive measures like creating trusts, engaging in estate planning, and imparting financial education to younger family members.
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Foster a Culture of Hard Work: Many wealthy families attribute their success to hard work and determination. Encouraging family members to pursue challenging careers and strive for excellence is a common practice.
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Practice Philanthropy: Wealthy families often give back to their communities through philanthropy. This may involve supporting charitable causes, establishing foundations, and actively participating in philanthropic efforts.
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Take Calculated Risks: While caution is essential, wealthy families understand that calculated risks can lead to substantial rewards. They may undertake investments or business ventures with higher risks, provided they are well-informed and have a solid plan.
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Stay Organized and Plan Ahead: Organization and long-term planning are hallmarks of wealthy families. Having a clear plan for managing wealth, setting financial goals, and monitoring investments helps in reducing taxes and preserving wealth.
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Seek Out Opportunities for Growth: A growth mindset is characteristic of wealthy families. Actively seeking opportunities to expand businesses, invest in new ventures, and explore innovative investment opportunities is part of their wealth management strategy.
In conclusion, these strategies, when implemented with diligence and the support of experienced advisors, contribute to the longevity and prosperity of wealthy families across generations.
