When the wealth of the rich people is mentioned in the media it runs into many millions of dollars.
So where do the rich they keep their money?
The multi millionaires are probably in many ways cash poor but asset rich. They realize that keeping money in the bank as cash is actually costing them rather than rewarding them. Many bank accounts even when depositing large amounts of cash pay a relatively low rate of interest. By the time tax has possibly been paid the rate of return can be lower than the rate of inflation meaning that in real terms the value of that cash is decreasing.
The Rich People
This is why the rich people will invest in real estate. Real estate will normally grow at a rate exceeding inflation and as long as you don’t panic and sell if prices have fallen you are on a safe return for your funds. The real estate can of course be let and therefore produces an income from the investment as well as the potential growth from the value rising.
More areas for The Rich
Other areas that the rich will invest in are in businesses. This can be more risky but if you know what you are doing the chance of growth can outweigh some losses. Investment may be made on the stock markets by buying shares in various companies. Or maybe the investor will buy directly into a private company perhaps a company early in its life with great potential. Often the wealthy have skills or contacts that they can introduce into that business and ensure that it will grow. Once that business has grown they will invariably look to privatize it and sell their shares and take their profit.
There are some lessons to be learned here for the start up entrepreneur. However you will not have the cash to invest like the rich multi millionaires. However investing in your own business rather than spending the money on yourself can help it to grow and produce a great income for you later.
Let me know when you are one of the rich!
The Entrepreneur Club