3 Individuals in a wealthy CT suburb who had started their own money management firm bought a $1 ticket for the lottery and appeared with their attorney to announce they won a $254 million dollar power ball. They created a trust and are going to distribute a large portion of the money to various charities. A video and article about their win can be seen by clicking here.
Picture of 3 winners from Fox CT
Among the key points:
Most of those folks with a net worth of $1 million or more have earned it themselves by their actions.
The Wealthy are typically business owners of various types who typically put most of the money they make into making more money. Through investment and not consumption they can grow the wealth.
Wealth is the result of hard work, planning and discipline.
Wealthy diversify their investments, which gives them more flexibility to ride out difficult times. "Their portfolios that go way beyond just stocks and bonds into hedge funds, currencies, commodities and emerging markets," said Leslie Lassiter, managing director of the JPMorgan Private Wealth Management.
Millionaires use cash for their purchases more frequently as opposed to running up large interest on credit card type purchases or financing their lifestyle which some with more modest means do.
Most wealthy people use debt for investment purposes and are careful not to over-leverage themselves.
The wealthy typically spend lots of time planning and enjoying making and following a strategy to patiently achieve their goals over the long term.
"The best ones really understand how much liquidity they need to cover their expenses and make sure they have that much cash on hand," Lassiter said. "That's something the average person should do as well."
Suggestions for building wealth:
Live below your means
Plan: for today, tomorrow and years after retirement.
Diversify investments.
Reduce use of credit and turn to cash - The point of this comment was not to run up large interest rates and debts although actually the best practice can be to use credit that offers cash back or rewards then pay it off on time as it further enhances the credit rating and gets money back or savings on other items.
Have access to cash: While the rich keep much of their wealth invested, they can get cash when they need it. Lassister suggests a year's worth of cash to cover expenses; Danziger thinks three years worth is a better bet.
Spread cash around: When the wealthy took money out of the stock markets a few years ago, they opened a number of bank accounts, all guaranteed up to $250,000 of deposits by the Federal Deposit Insurance Corp.
Important to teach children and seek out good estate planning attorneys: The affluent can go to great lengths to teach their children about money and how to manage it -- something every family should do. They should also be aware of the family finances and the family should be aware of the plan so there is less a chance of probate or trust litigation being needed.
althy Baby Boomers keeping Inheritance for themselves.
A US Trust survey of 457 high-net-wealth individuals with at least $3 million in assets they could invest released Tuesday found 51 percent said it is not important to leave their kids an inheritance.
"These are mainly self-made people," 50 percent of whom said they paid a price in personal relationships and possibly their own health when they made their wealth, US Trust President Keith Banks told CNBC. So they think "I’m going to get a return on that investment for myself, number one, and maybe my children down the road."
Among the study's other findings: 75 percent said their wealth is the result of their own focus and hard work, 52 percent have not fully disclosed their wealth to their children and 55 percent intend to actively volunteer after retirement.
"This is the 'forever young' generation. So they don’t think like our parents did" that when you hit 65 you relax in Florida, he said. "These are people that are serial entrepreneurs, they’re looking forward to starting new businesses, they want to volunteer, they want leisure time, they want to travel. It’s almost a new beginning for a lot of them. It’s also a way, in their minds, to stay young and feel young."
While nearly all had at least a minimal plan in place most were far from comprehsive planning that they should have been doing to help protect for the long term care of their finances and values.
Only 3% of the business owners in the survey had a succession plan in place.
Also interesting that of the ultra wealthy Bill Gates and Warren Buffet are recruiting to give at least half of their wealth to charity. The article does not really address the issue but it can be more helpful to provide less for the children of the very wealthy. If they have too much they will not feel the need to be productive and work for themselves. Ivanka Trump for example went to a top school and has worked in professional capacity and not merely earned money from being famous or partying. This point is made in the movie Arthur. Although he is wealthy it delays his growing up and he relies to heavily on the family and others to care for him. Funny for a movie but for real life it is sad when a child's ambition is taken away by never needing to work.
U.S. Trust found that many children of these first-generation wealthy families are not receiving the guidance and support they need to handle either the emotional aspects or financial responsibilities associated with family wealth. Among wealthy parents surveyed:
Other reasons cited were fear that their children would become lazy (24 percent); would make poor decisions (20 percent); would squander money (20 percent); or would be taken advantage of by other people (13 percent).
Though 84 percent of parents think their children would benefit from discussions with a financial professional, nearly six in 10 (59 percent) have never introduced their children to the professionals managing their financial affairs.
See Margo Beller - CNBC April 19 Boomer Wealthy saving for themselves
See also Business Wire.com Info re the US Trust Survey
Interesting video by the Wall street journal discussing that Berkshire Hathaway the multi billion dollar conglomerate run by Warren Buffett the 2nd wealthiest person in the world who has vastly increased the size of a lot of people's trusts and estates but is now 80 years old may seek his friend and the 3rd wealthiest person in the world to run the company short term if he were to resign soon. This follows the resignation of David Sokol who was widely believed to be a successor upon Buffet's eventual resignation.
They have worked together on charitable causes and seeking to get other billionaires and multi millionaires to donate at least half of their estates to charity. Gates having run a major company prior to resigning from Microsoft is thought to be able to lead in the short term even though it would be a different industry but is believed to be more interested in spending most of his time on his charitable foundation so would just be a short term solution.
Wall Street Journal video click here
David Sokol a 55 year old widely regarded as being on the short list to replace 80 year old Warren Buffett the world's second wealthiest man in his capacity running the hugely successful Berkshire Hathaway when Buffet retires has resigned as chairman of several Berkshire Hathaway subsidiaries.
Buffett issues a press release and referred to the decision as a total surprise. The full press release and further info can be seen by clicking here
Sokol told CNBC on Thursday that working for his "mentor" Buffett was "one of the best experiences of my life," but that he wanted to invest his family's money and "build a mini-Berkshire, if you will."
"I'd like to do what [Buffett] did in 1965: invest my own money," he said.
In 2009, Buffett handpicked Sokol to turn around the failing Berkshire subsidiary NetJets, a private jet operator. At first, Sokol got flak from internal NetJets managers for deep layoffs. But within a few months, he reduced the company's debt from $1.9 billion to $1.3 billion. He also cut about $100 million in costs, enough to make the operation profitable.
David Sokol
According to 2011 Forbes Magazines annual richest people list Carlos Slim is worth $74 billion. He is the wealthiest person with Bill Gates' $56 billion and investor Warren Buffett's $50 billion being second and 3rd. Overall the World has 1210 Billionaires.
Slim's $74 billion is more money than the one-year GDP's of 148 nations.
His fortune increased $20.5 billion this year according to Forbes. Forbes attributed the increase to a rise in Mexican stock prices as well as successful mining and real estate projects.
A total of 332 Asians made the list, surpassing Europe's 300 for the first time. Moscow, with 79 billionaires, racked up more berths on the list than any other city in the world. The United States still has the lead in total number of billionaires, with 413 of the 1,210 on the list.
He did so in part by focusing on selling services to the poorer and underserved parts of the market. For example, he sells prepaid cell phone service in amounts of as little as $2 or $3, a service widely used by people whose income is too low or variable to afford a monthly calling plan. Still, the per-minute price of prepaid calls is often higher.
Slim, 71, is the son of an immigrant shopkeeper who amassed a range of retail, industrial and telecom holdings and has ventured into oil, construction and infrastructure sectors.
A civil engineer by training, he has bought up troubled or government-owned companies of all types, fixed them and resold them for huge profits.
Read more: Fox News Latino
