Financial planner says rich people do 5 things to stay rich


Most rich people have ways to make their money last. And, after years of advising high net worth individuals, financial planner Patrick Rush says many of his clients have a few traits in common.

“The vast majority of our customers are the millionaires next door,” he says. “They weren’t huge incomes, but just really disciplined savers, putting money in 401 (k) and brokerage accounts, and racking up over a million dollars when they’re ready to take. their retirement. “

In his years of experience working with such people, he says there are five approaches he commonly sees that help wealthy people continue to grow their money over time.

1. Rich people have a financial plan and stick to it

Wealthy people who keep – and even build – their wealth over time always have a more holistic financial plan, says Rush.

For many of its millionaire clients, a financial plan isn’t just about how they’ll spend and save.

“You need to know all the details of a family’s budget and expenses, what type of insurance they have, what their estate planning looks like in terms of legal documents, and what their goals are to potentially leave a legacy for family members.” or charities, ”he says. Often, financial planning also takes into account taxes, employee benefits and investment plans.

Rich people are getting the right help to craft this plan and know what action they need to take today to stick to it.

2. They don’t worry about their investments, nor do they often manage them

Most of the wealthy people Rush works with don’t think about trading stocks. They don’t think about trying to time the market or making big bucks on the next hot stock. Instead, Rush says he encourages clients to take a long-term view of investing.

“We are not trying to outsmart the markets. We just want to harness the power of the markets to give our investors the greatest likelihood of success,” he told Insider. Often times, the simple act of buying stocks and holding them for the long term creates the best chance for success.

For many high net worth Rush clients, investing isn’t an active process, it’s a matter of patience. “We know we’re not going to be right every year, or every three years, or even every five years. But we do know that over time we give our customers the greatest likelihood of success.”

3. They over-planned their retirement

For many people, retiring from full-time work means living on less income and making sacrifices. But, rich people stay rich in retirement with careful planning.

Rush says his clients often plan too much for their retirement. “We use the 96-year life expectancy for our clients because we know that there is about a 25% chance that for a healthy 65-year-old couple, at least one of them will live to ‘at 96. ”

By over-planning, wealthy people are able to maintain the same standard of living in retirement for longer. “At the end of the day, the last thing we want is for you to run out of money.”

4. They find ways to lower their taxes

Through careful planning, the rich have learned to reduce their taxes payable.

They know how to take advantage of certain tax breaks and incentives and reduce the amount of taxes they owe now and later in retirement. While taxes can be a complicated thing to understand, reducing taxes is part of their overall financial plan and is factored in every step of the way, from where they invest to how they give gifts.

Paying less taxes means keeping more in the long run. And for people who have increased their wealth and slowly moved into higher tax brackets, lowering their total taxes is a critical way to maintain their wealth.

5. They incorporate charitable giving into their financial planning

Along with tax efficiency, wealthy people often include charitable giving in their financial plans. Not only do most rich people feel pressured to give back, there are a number of tax benefits as well.

These gifts could take many forms, says Rush. These can be monetary donations, but they can also be donations of stocks or distributions from an IRA after a certain age.

Charitable contributions can help reduce total taxable income, which in turn could reduce income taxes and even health insurance premiums in retirement. The gift has two purposes, and it can be beneficial in more than one way.


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