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For many, an ultra-high-net-worth lifestyle is defined by extravagant living. A lush life is all that it's worked out to be if you can't maintain what's important to you in the long run. Living an ultra-high-net-worth lifestyle may seem extravagant and appealing to many.
While indulging in luxury may bring temporary satisfaction, prioritizing long-term stability and personal values is much more rewarding. Striking a balance between opulence and sustainability ensures that one can truly enjoy the fruits of success and pass it on to future generations.
What Is an Ultra High Net Worth?
To get a better grasp of an ultra-high-net-worth lifestyle, you need to understand what is considered ultra-high net worth. There is a difference between a high net worth and an ultra-high net worth. High net-worth individuals typically have a net worth of over US$1 million.
By definition in the Wealth Report from Frank Knight, a UHNW individual is "someone with a net worth of US$30 million or more, including their primary residence."
Steps to Maintain a Long-Term UHNW Lifestyle
Ultra-high-net-worth (UHNW) individuals have access to wealth management firms that advise them on their financial decisions. They possess a financial acumen that allows them to construct diversified portfolios across a broad spectrum of investments and best practices.
These best practices include:
1. Implementing a Savings Strategy
Always keep in mind that wealth is what you keep, not what you've earned. An ultra-high-net-worth lifestyle means nothing if you don't have a saving strategy. Even the ultra-wealthy need to learn how to maintain financial discipline. It allows effective management of finances, leading to improved wealth preservation and long-term growth.
A savings strategy leads to a consistent surplus.
A savings strategy can be beneficial for tax planning as well. Certain savings or investment vehicles may offer tax benefits depending on your circumstances. For UHNW individuals, tax liabilities can be substantial, so optimizing tax efficiency through strategic saving can be advantageous.
No matter how many financial assets you possess, there might come a time when you require immediate access to cash. There are multiple reasons why one might consider this, including:
- The opportunity to capitalize on new investments
- Effectively handle unexpected expenses
- Address potential liquidity crises
Implementing a well-organized savings strategy for an ultra-high-net-worth lifestyle provides you with access to funds without the stress of selling assets hastily. This strategy proves even more beneficial during unfavorable market conditions.
2. Developing a Diversified Portfolio
Part of the ultra-high-net-worth lifestyle is making your wealth work for you. This usually means keeping a diversified portfolio. No one, regardless of their tax bracket, should avoid a diversified portfolio when they can.
UHNW individuals possess diversified portfolios that span various investment types, ensuring a broad range of financial opportunities. These investment opportunities may include:
- Public equities with stocks and shares of companies that are listed on the public stock market
- Investments in private equities like private companies or startups
- Residential and commercial real estate
- Hedge funds investments
- Venture capital in early-stage startups
- Fine art and collectibles that can appreciate in value
3. Creating a Suitable Budget
Just because UHNW individuals have millions in investible assets doesn’t mean they should spend with reckless abandon. Contrary to common beliefs, a significant number of wealthy individuals choose to live below their means. This doesn't mean that they live frugally, but rather that they consciously refrain from unnecessary extravagance.
Their focus in their ultra-high-net-worth lifestyle lies in prioritizing saving and investing for a more secure financial future. This doesn’t exclude enjoying the luxuries they can afford, it just means implementing a better budget to manage cash flow. It is possible to live a very comfortable UHNW lifestyle with an ample budget to enjoy life.
4. Setting Clear Goals
Setting clear goals is an absolute must for achieving financial success in investments and business ventures. By defining specific and measurable targets, UHNW individuals can create a roadmap that guides their decision-making process to maintain their ultra-high-net-worth lifestyle. More importantly, their financial planners and wealth management firms can help them to achieve this success.
Clear financial goals provide direction, focus, and motivation to stay on track toward desired outcomes. Without clear goals, investments and business ventures can become aimless and result in wasted time, energy, and resources. Well-defined objectives serve as the foundation for strategic planning and ultimately lead to financial growth and success.
5. Finding the Right Experts
As wealth increases, managing it becomes more complex. It takes a lot to maintain a long-term ultra-high-net-worth lifestyle. UHNW families need a partner to handle diverse investments, global assets, multiple tax jurisdictions, and intricate estate planning requirements. That’s precisely why UHNW individuals rely on the expertise of many to get things done right.
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Family offices and wealth management firms offer personalized services that cater to the unique needs, goals, and risk preferences of UHNW families. By doing so, they ensure wealth is protected and positioned for optimal growth.
Ensuring the protection of wealth for future generations is a herculean task and needs insights from attorneys, tax professionals, money managers, and more. Wealth management firms specialize in offering expert guidance on establishing trusts, wills, and succession plans to facilitate a seamless transfer of wealth.
Family offices and wealth are responsible for thoroughly assessing and managing risks related to investments, businesses, and personal assets. They take proactive steps to mitigate these risks by implementing various strategies such as insurance coverage, hedging techniques, and asset structuring. Most UHNW individuals don’t have the knowledge and experience to handle these complex processes.
Prepare Yourself for Better Financial Management
Asset Preservation Wealth & Tax is a wealth management firm that listens to our clients. We are fiduciaries who want our clients to meet their offer objectives. Let our experts guide you through how our comprehensive services can help you maintain an ultra-high-net-worth lifestyle. We can handle it all—from tax planning to estate management and beyond.
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Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.
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