What do millionaires do with their money? Bank it
The world of high-net-worth individuals is a rather insular one. These are people who typically have substantial assets — usually $1 million or more — and often think about how to invest their money, grow it, and keep it safe.
But what does that mean for you and me? If you’re not part of the 1 percent but aspire to be someday, what can you learn from these elite individuals when it comes to money? In short, plenty.
Fortunately for us, we live in a world where information is plentiful. Rather than keeping their financial insights hidden from the public eye, many millionaires have chosen instead to share some of their best tricks when it comes to saving and investing money. Here are seven things that millionaires do with their money that might surprise you:
- They bank their money
They bank their money
You don’t have to earn a million-dollar salary to bank your money — you just have to be smart about how you spend it. Millionaires understand that their earnings are finite, so they spend carefully and save as much as they can.
This might seem like common sense, but it’s surprising how many people let their money slip through their fingers. Millionaires understand that the more you earn, the more you need to save — otherwise, you risk falling into the “middle-class trap” and earning a lower standard of living than you’re currently accustomed to.
If you want to build wealth, the first step is to earn more — and the next step is to save as much as you can. With those two things, you’re well on your way to joining the ranks of the millionaires.
They only invest in things they understand
A common misconception about investing is that you have to invest in stocks or other high-risk assets in order to build a sizeable fortune. While this is true for some people, it’s not true for everyone, and it’s definitely not true for millionaires.
Millionaires understand that they don’t have the time, energy, or expertise to research and analyze every single stock on the market. Instead, they focus on investing in assets that they understand and that they can easily track.
Millionaires might invest in real estate, gold bullion, or government bonds. They might even choose to invest in low-risk index funds or exchange-traded funds (ETFs). The key is to find something you understand and stick with it.
They don’t trust anyone – especially when it comes to their money
Sadly, we live in a world where scams, fraud, and other dishonest activities abound. When it comes to your money, it’s best to trust as few people as possible.
Millionaires understand this, and they don’t blindly trust financial advisors, stock brokers, or the companies they invest in. They take time to read financial reports and examine the structure of various companies to make sure that they’re legitimate and trustworthy.
Millionaires also take care to safeguard their information, passwords, and login details so that hackers and scammers can’t gain access to their accounts and steal their money.
They don’t let their ego drive investment decisions
Investment decisions should be focused on generating profit and building wealth — not on making a name for yourself on Wall Street. Millionaires understand this and don’t let their ego get in the way of smart investing.
Ego might prompt you to invest in a company that you think is “cool” or “trendy” but that isn’t actually a wise investment. Or it might prompt you to invest in a specific asset, such as gold, even though it isn’t necessarily the best investment choice.
Millionaires have a keen sense of self-awareness and know when their ego is affecting their decision-making process. They remind themselves that investing is about generating wealth, not making a name for yourself.
They pay off their credit cards every month and avoid debt at all costs
Credit card debt is basically a ticking time bomb for the average person. When you’re in debt, there are people out there earning interest off of your money and making money off of your ignorance. That’s the last thing you want to be doing with your money.
Einstein once said, “Anyone who has two dollars to invest should invest one in themselves.” When it comes to credit card debt, he was right — and millionaires understand that.
Millionaires try to avoid credit card debt at all costs, as it’s basically a trap that they don’t want to fall into. They instead try to save up the money they need before they buy something and pay off their credit card balance each month so that they aren’t accruing interest.
Their portfolio is diversified across many asset classes
A “set it and forget it” approach to investing simply doesn’t work. Successful investing requires a significant amount of analysis and due diligence, but it also requires a good deal of patience. You don’t want to overreact to the market’s ups and downs — you want to let your money work for you and gradually grow over time.
Millionaires know this and diversify their portfolio across many asset classes. This helps them guard against major losses in any one particular asset class, such as the stock market.
While millionaires don’t ignore the market and let their money sit in a low-interest savings account forever, they also don’t panic and sell their assets when the market takes a bit of a dive.
There are many things that millionaires do with their money that you can learn from. It’s important to bank your money, only invest in assets that you understand, and avoid credit card debt at all costs. In addition, your portfolio should be diversified across many asset classes. By doing these things, you can position yourself to become a millionaire someday.
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