🧐7 Strategies the Wealthiest Investors Do With Their Money That Are Too Easily Ignored By The 99%

The most basic way to attain wealth is by waiting for it to grow.

This requires no upfront experience, age limit, knowledge or wasted time. Just extreme patience.

Now don’t get me wrong, waiting for money to fall from trees will keep you waiting forever. In the market, waiting is your best friend as time in the market matters more than timing the market but when it comes to your earned income, chase after it and ask for it like there’s no tomorrow.

Upon entering HS, my teacher told me something that I didn’t think would stick with me until this day and has shaped my financial future for the better.

She stated: “Most people quit due to a lack of patience not IQ, talent or any other ridiculous metric that kids are obsessed with.”

99% of the time, unless all spent, as one ages, their wealth compounds. Earning a small profit is highly unlikely even for highly-ranked day traders who speculate and gamble all day so you’re better off mirroring your gains with a major index.

To weed out competition and be in it for the long run all you mainly need is consistency, patience, less free time and a job to keep you busy from timing and charting the markets.

Image by Unsplash

Boring Is Back

In fact, boring has always been cool and surprisingly, the best way to earn big overtime.

The truth is, if you don’t know why you are investing or what you’re investing in, then you’re waisting your time.

This isn’t Vegas this is your hard earned money on the line.

If you’re in it to win it and treat it like a game, might as well get out now before markets start getting extra frothy, inflated and volatile. They already don’t make sense.

The good news is, if you plan on riding out the volatility, accept that not everyday is a green day and understand the markets do go up overtime, you are letting your money truly work for you.

The more work you do in the markets, the less likely you are to let it help you earn a living.

Boring is basic and basic is blissful. The market is there for you not against you. If you find yourself tracking and timing markets 9–5 pm ET daily with your Reddit friends, as much as that might be fun, active investors historically loose out more than passive investors.

Stay diversified, boring, basic and realistically risk averse like the top performers.

Bank of America completed a recent survey of nearly 700 high net worth investors (those with investible assets of at least $3 million) that explored these commonalities. Here are seven key findings from the survey that a majority of high net worth investors do with their money that you may want to consider as well. And FYI, no special IQ or talent needed, just patience:

#1 Cash Is King

Nearly 6 in 10 high net worth investors have at least 10% of their portfolio in cash because the more you’re worth, the more you save. Read here why. As mentioned earlier, the more you’re worth, the more you understand that history repeats itself and the market doesn’t make sense especially since it trades a few months down the road. This calls for extra cash as the majority of millionaires have 50%+ of their wealth stashed into the markets and they could flop any time. High-net worth individuals are conservative and more risk-averse in attempt to stay sane and they never put all their eggs in 1 basket like RoaringKitty vs AMC. Cash is there when you need it so you don’t have to scramble, sell your investments and pay tax on top to stay alive during a deadly pandemic.

#2 Love Liquidity

They aren’t ashamed to have more cash. More than half of these investors keep their liquidity high so that they are in a position to act quickly when great opportunities present themselves. Especially amongst novice investors, they prefer to go big or go home yet do not realize that what’s certain is uncertainty. The market is a game of luck and trail and error. Just because your track record is stellar doesn’t mean it will continue. A source of liquidity is found in tangible to non-tangible assets from CDs to Treasury bills to earn a bit more than cash.

#3 Long-Term Not Short-Term Gambling

Six in 10 high net worth investors seek well-balanced, risk-managed growth. Even if it means sacrificing high profits, it’s still important for them to lower the risk of their investments to take more risk in the future. As you can see, the rich are not only boringly simple with their tactics, they focus on long-term goals. They know their future will be prosperous if they put in the work now. A vast majority (83%) have made their investment gains through a long-term buy and hold strategy.

#4 Take Advantage of Tax Advantages

More than half of high net worth investors say that it’s more important to minimize the impact of taxes when making investment decisions. Taxes are a burden to the wealthy, especially the more you make. Learn how the highest paid billionaires in the U.S. have been avoiding them for years and only recently got caught.

The reason why taxes are a burden is due to the progressive tax placed on high-net individuals. The more you make, the more you pay. The easiest way to avoid this is through earning investment and portfolio income not earned income through an employer which are taxed only when sold not earned.

Poor tax management can add up quick considering the IRS can audit you anytime if you pay less than you really owe and will be shown on your record for years with possible jail time if repeated.

#5 Alternative Investments

Alternative investments are loved by more than half of high net worth investors due to their scarcity and prestige yet you don’t have to have a million dollars to invest in them.

They range from tangibles such as physical real estate, farmland, art, and collectibles to non-tangibles such as crowdfunding/sourcing, NFTs and cryptocurrency.

The more diversified the better. These investments never go out of style, always in demand and only appreciate in value.

Some, cough cough Bitcoin may be fads today but overtime, they are promising assets to many.

#6 Use Your Credit Card Wisely

Take advantage of points, rewards, perks all the jam! It’s not cheap it’s frugal and smart. Use what you spend but of course, don’t use your card solely for the benefits. Make sure to pay it off each month to avoid high interest consumer credit card debt!

Nearly 65% of high net worth investors agree that credit is a strategic way to build wealth.

#7 Impact Investing

This is the practice of investing into companies and organizations with the intention to generate a beneficial social or environmental impact alongside a financial return. Over the past year, the percentage of high net worth investors and companies, most prominently, BlackFock who own impact investments has tripled because we only have one Earth after all! Of those investors surveyed, 11% own impact-focused investments in their portfolio. These funds may focus on reducing carbon emissions, fossil fuels, promoting guidance, diversity, ESG(environmentally sustainable governance) and socially governed funds. Giving back to the earth is a noble cause and you don’t have to be a wealth philanthropic donor like Mackenzie Scott to invest in a positive social impact cause and support issues you strongly care about.

Clearly, there’s nothing too amazing or revolutionary about high-net worth individuals. This information isn’t kept secret for a reason yet overtime, there stands to only be a select investors in the top 1% all thanks to following these rules religiously and cautiously.

If Buffet at 90 can do it, you can too and the returns only starting taking shape 7 decades later.

Do you have the patience?