Do you ever wonder what life is like for the rich and not-so famous? Do you wonder how they invest their money? Do you wonder about how they made their millions or what secrets they might have for you to benefit from?
Well today is your lucky day as I am going to share the insider details.
For a few years, I worked for a high net worth investment planning firm. To be considered a client, you needed to have at least $2 million in investable assets. What does this mean?
It means you have to be able invest $2 million with us, in some combination of retirement and non-retirement accounts. Don’t get this confused with net worth, as net worth has nothing to do with investable assets.
In total, we had over $500 million under management. I mainly worked on building the plans, so I got to know the intimate details of our clients. I knew the things that most other people would never know about these people. Like how much they really spend, earn and save.
So what did I learn from dealing with the rich? I list the most interesting insights below. Some things may seem obvious to you while others will surprise you. Hopefully, you will learn something and be able to apply it to your financial life.
Priceless Lessons Learned While Working With The Rich
Most of our clients were self-made millionaires. Very few inherited their money. The majority were doctors, a good many owned their own business, and a few were executives in various size companies.
In fact, one worked for Kellogg’s, the cereal company. Every holiday season he would bring us boxes of cereal!
Another worked at a pretzel factory and we would get pretzels from him. Finally, another worked at Clif Bar and we got a ton of those too.
Interestingly, many of the clients who inherited their wealth were going broke because they couldn’t control their spending. It just goes to show you that you need to understand how to handle money if you want to be rich for the long term.
If you are horrible with money, regardless if you inherit it or you win the lottery, odds are you are going broke sooner rather than later.
The doctors had a ton of debt and very little non-retirement savings. In fact, most of them had a good-sized retirement account and nothing saved outside of it. They also mainly had huge mortgages (close to $1 million in debt!) and drove fancy new cars.
Those who owned their own businesses would never be picked out of a line up as being a millionaire. One client would wear shorts and a Hawaiian shirt all the time, even in the winter. He was worth over $10 million.
Many lacked proper insurance coverage. I guess this is because insurance is boring and most people overlook it. But having adequate insurance coverage is huge if you plan on keeping your wealth. If you are only worth $50,000 you don’t need $4 million in insurance coverage, but if you are worth $4 million, you better have more than $50,000 in insurance coverage!