Resolutions from the Uber-Wealthy


Ten days into the new year, and many of us are still trying to make time to put our grand resolutions for 2017 in place. Either many of us have resolved to eat better, exercise more, start a budget, be patient with our children…or some of us are still figuring out what our goals should be! In the event that you are in the latter category, a recent article in the Wall Street Journal shared these habits of the ultrawealthy (those with at least $10 million in investable assets) that would make great goals for 2017:

  1. Consolidate accounts – The more that your accounts are scattered at different institutions, the easier it is to make a money mistake. If you have multiple credit cards that you do not use, select one or two to retain, and close the rest for less chance of identity theft. If you have old retirement plans from previous jobs strewn about, collect and consolidate them into an IRA to avoid a) forgetting they exist and b) forgetting to manage the investments.. If your banking is scattered all about town, select your favorite institution and move all of your accounts there (provided your bank balances are under the FDIC limit of $250,000) and save yourself time and effort in monitoring the accounts.
  2. Keep some cash handyMost of the ultrawealthy families highlighted in the Walll Street Journal article kept about 12% of their assets as cash (which, seeing as each family was worth at least $10 million, means about $1.2 million!). How much to hold in cash is unique to your situation, but generally cash should be held for two main reasons: emergency and opportunity. We all have been taught many times about the emergency fund: you should have between 3 – 6 months of your core living expenses in cash in the event that you suffer a major financial hardship. However, many of us have not considered an “opportunity fund”—this pile of cash allows us to take advantage of great opportunities that may present themselves without disturbing our ordinary budget. Opportunities may be a great investment in property, buying stocks when they go down, or simply a fantastic deal on a 5 piece furniture set at Costco…
  3. Look for what you are missingMany times we are keenly aware of what we should be doing in our financial lives (saving more, spending less, putting more in our retirement accounts, etc.). Yet, there are many things that don’t often cross our minds like do we have enough life insurance? Or should we use a trust to protect our children? Taking a good look at your total financial picture—perhaps with the help of a financial planner—can help with identifying areas where you may be missing an important piece.

And the last lesson learned by the ultrawealthy? It’s never too late – some of the ultrawealthy families only achieve their great wealth in their late 50s and 60s. They worked hard, controlled the things that they could (such as fees and taxes), and continued to invest. So, 2017 is a great year to get started on building a happy, healthy, and prosperous future!

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