Taxes affect our earnings and assets, and there’s no escaping them. The wealthy are aware of the impact of taxes make, and they try to see it as an advantage. As an example of how taxes can be used positively, take the Great Recession of 2008. A plethora of mutual funds went down by 30%-40%, but instead of avoiding them in 2009, if mutual fund’s track record was strong, the wealthy and their financial advisors accepted them as losses. These losses were carried forward for future investors creating less of a tax drag (or positive tax benefit).
Don’t follow the masses
Often, investment is about thinking outside the box, not about following the masses. One vital aspect of the wealthy is that they continue to have their assets build by thinking differently. They don’t focus on mutual funds or ETF portfolios but utilize investments like commercial real estate, private equity, and advanced-option strategies to grow and mitigate risks. The wealthy ensure that the investment firms and advisors they turn to have a record of working with families with a high net worth.
Work with intelligent people
It’s easy to hire competent, intelligent people – you look for a person who works in a specific field and ask questions to ensure they’re good. However, the wealthy continually hire the “smartest” individuals. Their accountants know how to file taxes and, obviously, complex tax structuring. Their attorneys can do the documentation while also thinking what will happen ten years from now. Their financial advisors think beyond investing – communication skills, behavioral finance, and market history. Working with smart people like those in Freedom Financial Service can be extremely beneficial.
Structure the assets’ ownership
When working with wealthy families, their assets’ ownership structure is one of the most important traits we examine. Those who possess wealth don’t just have money or assets, but they build structuring to safeguard it. They are worried about asset protection – using appropriate ownership so that unforeseen events don’t affect their assets, like putting their home in a trust. They are concerned about generational wealth – and using irrevocable trusts and generation-skipping trusts.
Prepare your children for the future
The wealthy don’t typically turn over all of their money to a charity. They give a significant portion of it to their children and grandchildren. With the gift comes responsibility; the best families attempt to teach their children about wealth, its complications, and responsibilities. These families use “Next Gen” training programs provided by organizations like UBS, JPMorgan, and BofAML. They assist their children in getting internships with groups and private wealth advisors to further their education regarding money.
If you’re looking for more financial advice, explore what The Blueprint Success has to offer.