1. Wealthy people have a financial plan and stick to it
Wealthy people who keep — and even build — their wealth over time always have a bigger-picture financial plan, for many of millionaire clients, a financial plan is just a reference point for a destination, and stick to that.
“You need to know all the nuts and bolts about a family’s budgeting and expenses, what kind of insurance they have, what their estate planning looks like in terms of their legal documents, and their goals for potentially leaving a legacy behind for either family members or charitable organizations,”.
Oftentimes, financial planning also considers taxes, employer benefits, and investing plans.
Wealthy people get the right help with this plan and know what steps they must take today to stick to it.
2. They’re neither worried about their investments nor managing them often
Most of the wealthy people don’t considering trying to time the market or making lots of cash on the next hot stock. Instead, we encourage clients to take a long view of investing.
“We don’t try to outwit the markets. We just want to harness the power of the markets to give our investors the highest probability of success,” he tells Business Insider. Oftentimes, simply buying shares and holding onto them for the long term creates the best chance of success.
For many wealthy clients, investing isn’t an active process — it’s about patience. “We know we’re not going to be right every year, or every three years, or even every five years. But, we know that over time, we are giving our clients the highest probability of success.”
3. They’ve over-planned for retirement
For many people, retiring from full-time work means living on a smaller income and making sacrifices. But, wealthy people stay wealthy in retirement with some careful planning.
The client Should over-plan for retirement. “We use the life expectancy of age 90 for our clients because we know there’s about a 25% chance that for a healthy 65-year-old couple, at least one of them will live to age 90.”
By over-planning, wealthy people can 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 reduce their taxes
With careful planning, wealthy people have learned to reduce how much they owe in taxes.
They know how to take advantage of certain tax breaks and incentives and decrease the amount of taxes they owe both now and later in retirement. While taxes can be a complicated thing to understand, reducing taxes is part of their overall financial plan, and it’s considered at every step, from where they invest to how they give gifts.
Paying less in taxes means keeping more in the long run. For people who have grown their wealth and slowly moved into higher tax brackets, reducing their total taxes is a critical way to maintain their wealth.
5. They incorporate charitable giving into their financial planning
Hand in hand with tax efficiency, wealthy people often include charitable giving in their financial plans. Not only do most wealthy people feel an obligation to give back, but there are many tax advantages, too.
These gifts could come in several forms, . They could be monetary donations, but they could also be gifts of shares of stock, or distributions from an Savings after a certain age. Charitable contributions can help lower the total taxable income, which could in turn reduce income taxes and even Medicare premiums in retirement. Donating has two purposes, and it can be beneficial in more ways than one.