Who wants to be a millionaire! 🙋🏽♀️ We sure do. We’re gonna need a few extra lifelines, though. The friend we phoned is busy diving for quarters between the couch cushions. 😵💫📞
Ever wonder where wealthy people keep their money so they stay rich? Let’s dive into their magic formula and learn a thing or two. 🥽
Here’s Five Fast Facts on how millionaires manage their finances:
- 💵 On Hand - Millionaires love to invest, but they also like to keep cash readily available. Think: checking, savings, and money market accounts. Also think: piles of cash in a briefcase, just because that’s a fun visual. Keeping some funds liquid helps cover daily expenses and financial emergencies.
- 💲 Taking Stock - Next up, wealthy folks sock their money away in traditional investments like stocks and bonds. Investments like these can have high rates of return, meaning they make money on top of money. These places are less liquid than cash and the accounts mentioned above, but they’re still fairly easy to access. Stocks and bonds are also commonly found in retirement accounts (401(k)s, IRAs).
- 🏡 Playing House - Now, for a not-so-liquid investment: real estate. Buying real estate comes in many shapes and forms. Some millionaires buy residential properties and rent them out to generate income. They may also buy into real estate investment trusts (REITs), which allow investors to buy, develop, and manage properties without actually owning it.
- 📈 Sonic the Hedge Fund - Peeps at a certain level of wealth may also invest in hedge funds and private equity. These investment vehicles pool money together to buy and sell assets. However, they usually require a certain amount of wealth to participate (think a net worth of at least $1M, excluding your primary residence, and earning upwards of $200,000 a year).
- 🎨 More Monet, More Problems - As for other investments, millionaires may invest in commodities, like oil and agriculture. Others may collect art or classic cars. And let’s not forget about crypto (high returns, but way riskier than traditional investments, since it’s not backed by Uncle Sam). All of these investments help wealthy people diversify their portfolio and hedge their bets in case one of the above investments goes south.
🔥Bottom line: If you’re not quite a millionaire (yet), you can still manage your finances like the big Kahunas. Saving is the name of the game and to start, make sure that emergency fund is nice and padded. It’ll come in handy the next time a surprise home repair hits you in the face. Speaking of, this article covers some top tips on how to handle those!
What’s your favorite saving strategy?
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