I’m sure you’ve heard things like the rich are wealthy because they inherited their money, millionaires are special, or the rich have more connections. Surprisingly, research shows that only 20% of millionaires earned their title through inheritance. The rest started from scratch and built their wealth over time.
What separates the rich from the rest is their simple money habits.
Read on to learn more about some of the odd things millionaires do with money but most of us haven’t tried.
Invest in Personal Development Programs
Millionaires view personal development as a journey of self-discovery, continuous learning, and growth. They invest in executive coaching and mentoring to get guidance on their leadership skills and decision-making capabilities. You’ll also find them listening to podcasts or reading personal development books to develop growth habits and gain a new perspective on things.
Invest in High-End Technology
The rich are fearless in investing in high-end technology. They fund tech giants like Microsoft, Apple, and Google, which are known for their market dominance and innovation. Some millionaires support futuristic technology by investing in tech startups focusing on industries like cybersecurity, artificial intelligence, blockchain, and clean energy.
Additionally, they may invest in technology-focused exchange-traded funds that expose them to a diversified portfolio of technology stocks.
Have Financial Experts Manage Their Money
Millionaires leverage the expertise of financial planners to help them manage and grow their money. They’ll work with professionals who customize their investment strategies to ensure they meet their risk tolerance, time, and overall financial goals.
The advisors also help with tax planning and devising tax-efficient strategies to maximize tax credits and deductions. Working with financial experts also ensures the rich are compliant with the law, have an estate plan to protect their assets, and have the right strategies in place to protect against different risks.
Invest in Fractional Shares of Properties
The wealthy are wise and understand the importance of managing their time and money well. Some millionaires opt to invest in fractional shares of properties rather than buy and manage properties directly.
They can buy shares in REITs, and single-family rental units or participate in real estate crowdfunding investments. Purchasing fractional shares also allows them to diversify their portfolio, as these are passive investments.
Invest in Cryptocurrency
Millionaires recognize the potential presented by digital assets and are willing to invest in cryptocurrency. They can choose to invest in cryptocurrencies directly, invest in cryptocurrency trusts, engage in cryptocurrency mining, or participate in cryptocurrency arbitrage and algorithm trading to profit from price differences.
Invest in Startups and Small Businesses
Millionaires are risk-takers and like to identify promising investment opportunities. They can act as angel investors and provide early-stage funding to startups in exchange for equity ownership and mentorship.
The rich also support startup incubators, act as venture capitalists, and may participate in equity crowdfunding platforms. Investing in startups provides a potential for high returns, allows them to diversify their investments, and may offer tax benefits and incentives.
Donate Their Money
A significant percentage of millionaires’ money goes to charity donations, either through monetary gifts or their foundations. Paul Alen, Elon Musk, Warren Buffet, and Richard Branson are a few millionaires who have given away most of their money to eradicate problems and fund unique research studies.
Invest in Collectibles
Some millionaires invest a portion of their money in rare collectibles. They have tangible assets like rare books, expensive musical instruments, fine art, colored diamonds, coins, and rare whisky bottles. The ultra-rich focus on acquiring unique, scarce, or historical items.
Millionaires understand that these collectibles’ value can appreciate over time and will hold on to them for a long time. That’s one of the clever ways millionaires avoid market fluctuations and get maximum returns on their investments.
Invest in Private Equity and Hedge Funds
Private equity works like a private investing club, where you buy a portion of non-public companies. Investing in private equity funds requires a minimum of $250,000, and some require you to be an accredited investor with at least $1 million.
The rich also earn huge returns from investing in hedge funds, which are pooled funds that fund managers invest to help them earn short-term but high profits. There are cheaper ways to invest in private equity, such as private equity ETFs, fund of funds, and angel investing.
Take Care of Their Health
Millionaires prioritize their health by spending money on organic and whole foods. They also purchase long-term care insurance policies to cover expenses associated with assisted living facilities, nursing homes, or in-home care services.
Most millionaires emphasize preventive healthcare measures and often undergo diagnostic tests, screenings, and medical checkups to detect health issues and prevent further complications. The rich also invest in personal trainers and tailored fitness programs to help them achieve their health and fitness goals.
Understand How to Use Debt and Insurance to Their Advantage
While the poor acquire debt to fund their lifestyle inflation and consumption, the rich use it to acquire income-producing assets like purchasing property or expanding a business. Using borrowed funds, millionaires amplify their investment returns and gain higher profits. The rich are also strategic in structuring their debt.
Some types of debt, like business loans or mortgage interest, may be tax-deductible, which reduces their overall tax liability. Millionaires also use life insurance as part of their wealth transfer and estate planning strategies. They might purchase life insurance policies with cash value accumulation features.
That will act as a tax-advantaged investment opportunity and provide liquidity for their beneficiaries. By using debt and insurance strategically, millionaires can optimize their tax efficiency, enhance their financial flexibility, and protect their assets.
Avoid Paying Unnecessary Taxes
Millionaires work with financial experts to determine every credit and deduction they can use to reduce their taxes. They understand that property taxes are deductible, with a limit of $10,000 for married joint fliers and $5,000 for single tax fliers on federal taxes.
The tax limit applies to local and state taxes, which include state income and sales taxes. Millionaires with rental properties or businesses can deduct depreciation to save on taxes. Those with investment income might also be eligible for certain federal tax benefits.
For example, if you sell your investments at a loss, you can reduce your capital gain taxes and use the losses to offset gains. That reduces your tax burden ultimately.
Buy Modest Cars
Millionaires do not overspend on the latest luxury vehicles. They realize that cars are depreciating assets and won’t spend excessive money on Ferraris or Cadillacs. Research shows that millionaires like Honda, Ford, and Toyota drive modest cars. Jeff Bezos and Mark Zuckerberg have been spotted driving a Honda Accord and Toyota Prius.
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