"Rich" and "a lot of money" are synonymous in the minds of many people, however, they are actually quite different. "A lot of money" means that you have a large amount of money in the bank, or have safe assets. But being "rich" is a behavior and a state of mind that is not necessarily related to the amount of your assets. Being rich has more to do with quality of life. If you want to turn bonuses from work or other assets (stocks, houses, inheritance, etc.) into lasting wealth, you must learn to manage your money, and make the right choices to ensure that your assets are not lost during an economic crisis. Of course, you can't carry wealth with you when you die, but you can follow certain steps so that your wealth lasts as long as you live.
Step
Method 1 of 3: Managing Finances
Step 1. Diversify finances in all aspects of life
Diversification is not only a way to develop assets, it is also a way to maintain wealth. Make sure your money is diversified in a variety of investments, including stocks, bonds, mutual funds, real estate, and cash funds. Different markets will react differently to certain events, so if you invest in several types of investments (such as stocks and bonds), you can cover losses in one with a positive performance in the other.
- Keep in mind that your risk profile may be different from when you built the asset. As your assets grow, you will begin to realize the importance of maintaining assets, instead of following aggressive, high-risk investments.
- Understand the balance of risk and payoff. The higher the risk you take on a particular investment, the higher the return you can get. Know your level of risk tolerance (how much money you can afford to lose when your investment fails, how much time it will take you to recover from losses), and discuss with a financial planner how to balance the investment. By balancing your investments, you will get enough returns, but not risk going bankrupt.
- Maintain liquidity. Liquidity means how quickly and easily an asset can be converted into another asset. Cash is very liquid, while houses are difficult to "cash out". While you can get rich quick on paper by accumulating houses and land, you will find that selling the property takes time. If you predict that you will need cash from assets quickly, you should not invest too much in property.
- Learn more about diversification by reading the English wikiHow How to Reduce Financial Risk article.
Step 2. Invest in new fields
Once you are rich, don't stop developing assets. Some of the richest people in the world are still investing (watch any Shark Tank episode to prove it). When you get rich, let money work for you, instead of you working for money. Find business opportunities that you can invest in to grow your wealth.
- Be an angel investor. By becoming an angel investor, you can invest in startup companies, and have the opportunity to invest in Uber or Amazon in the future.
- You can also invest in certain companies that you trust. Support companies directly by investing.
Step 3. Take care of your money
Live on income, not on asset sales, or keep expenses in a safe zone. Many financial experts say that the maximum recommended expenditure is 4-6% of the value of liquid assets per year.
Avoid selling assets to buy luxury items. By selling assets, you will only be a consumer who loses money, instead of an investor who makes money. Spending money on things that have diminished value or have no sentimental value is not a good way to spend money
Step 4. Create a budget
Even if you're already rich, you still need a budget for two reasons:
- First, the budget is very important to anyone, no matter how rich they are. A budget will prevent you from thinking that you have unlimited money. With a budget, it will be easier for you to maintain wealth.
- A budget should be made by anyone, because a budget teaches you to be disciplined with wealth. A budget also forces you to record all expenses.
Step 5. Avoid excessive consumption
If you're showing off your wealth by buying luxury items, it's a good idea to think about whether you really want to do it, or just to prove something to others. By being frugal, you will be able to maintain your wealth and be content.
Step 6. Set up asset custody
If you want to pass on assets, consider creating an asset custody that will prevent the heir from wasteful spending your inheritance.
- Anthony Fittizzi, director and wealth planner at the U. S Trust, describes asset custody as protection against the access and use of money by the testator.
- When starting custody, you can also set how inheritance can be used, as a strategy to protect wealth from generation to generation. You may want to arrange that an existing inheritance can only be used for educational purposes, for example, or that an inheritance will only be transferred a certain amount each month or year.
- Remember that once you place an asset in custody, it is no longer considered your property.
Method 2 of 3: Getting the Right Advice
Step 1. Find guidance and support for managing wealth, especially if the wealth is newly acquired or acquired quickly
Wealth gained quickly or recently acquired generally means new challenges and problems, rather than calm. Contact a financial planner for proper guidance and support.
Step 2. Talk to a financial planner
Even if you are already rich, you may find a financial planner with great suggestions for managing your wealth so that your hard-earned wealth can last a long time. A financial planner helps you create a financial plan, and manage your investments. They help you set financial goals, and use money to get satisfaction. They also take a holistic approach to help you understand your financial life. A financial planner can also help you find and communicate with other experts (tax experts, property notaries, etc.).
Step 3. Pay the tax specialist
You may feel comfortable with knowledge of tax codes such as PPH 21, but the complete tax code is thousands of pages long, and you may not be able to understand all of its contents. Working with a tax expert can help you understand your current tax situation, it can also help you find strategies to reduce taxes each year.
Step 4. Pay the notary
Notaries can ratify wills, letters of custody of assets, and other documents. With proper planning, your will will be executed properly, and you can save on land and building taxes.
Method 3 of 3: Developing Proper Thinking
Step 1. Keep emotions out of the protection of wealth
Many rich people are afraid of losing their wealth during an economic crisis or other calamity. Remember not to get caught up in trends when choosing alternative investments, but also consider financial opportunities.
- Don't follow the crowd. Although many people invest in gold or PT Anu shares, it does not mean that the investment is a good investment.
- When you consider a business opportunity, don't just look at the personality of the person offering the business, but also look at the financial benefits. Liking someone's personality is easy, but it doesn't always make you money.
- Focus on what's important in life. If you can spend extra time with your family or give to the community, do so. They can help develop perspective and calm. To be truly rich, you have to have friends, family, and a quality life, not just a pile of assets.
Step 2. Don't forget to give to others
Once you have money, don't forget to give, and your money will double. One way to keep wealth is to share (not just because of the tax exemption, you know!).
