6 Money Moves the Rich Make To Stay Rich
6 Money Moves the Rich Make To Stay Rich
Jennifer Taylor Sun, Apr 28, 2024,
If you’re trying to make more money, studying the rich is a great place to start. Some wealthy people were born into money, while others worked their way to the top. However they got there, many have figured out how to stay rich.
Learning how to make millions is one thing, but mastering the art of keeping that fortune intact is a different task. Many people get rich only to blow through their earnings in a matter of years.
Whether you have come into money or are still figuring out how to get there, keep reading to learn more about how the rich stay rich.
They Avoid Get-Rich-Quick Schemes
One common misconception is that the wealthy constantly look to get richer more quickly through engaging in activities such as picking stocks, said Laurie Samay, director of financial planning at Apexium Financial LP. “In reality, the wealthy are typically more interested in preserving their wealth.”
Rather than taking a risk on volatile get-rich-quick schemes, Samay said the wealthy take a slow-and-steady approach to investing, and they focus on diversification. She recommended investing across several asset classes to gradually build wealth.
“Many academic studies have concluded that the mix of stocks and bonds in a portfolio has the greatest influence on performance — even more so than transaction costs and security selection,” Samay said. “Like the rich, your portfolio should be adequately diversified across asset classes.”
Samay said being diversified might include exposure to:
Different types of bonds
Large-cap equities
Small-cap equities
International equities.
You can further diversify by investing in specialty asset classes, such as natural resources and real estate equities, Samay said.
They Make Retirement Savings a Priority
Among the wealthy, saving for retirement is typically a priority, because they want to maintain their current lifestyle — at least to a certain extent — during their golden years, Samay said.
“This principle is just as important for the average Jane or Joe,” she said. “Although it’s tempting to focus on improving your current financial situation, it’s never wise to ignore your future finances.”
Retirement might be decades in your future, but Samay said your best chance of having a financially secure and comfortable retirement is to start putting money aside today. She recommended taking advantage of any employer-sponsored retirement plans available to you.
“In a 401(k) arrangement, your employer will typically match all or a portion of the contributions you make to the plan, giving you more bang for your buck,” Samay said.
If your employer doesn’t offer a retirement plan or you would like to make additional investments, consider contributing to an individual retirement account or a Roth IRA.
“Although you might not be able to max out your contributions today, the sooner you start, the less you’ll have to save in the long run, due to market gains and compounding,” Samay said.
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