Broker Check

Challenges of the Affluent Investor

| January 02, 2019
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There are some investing challenges everyone has – how much to save for retirement, how to fund multiple accounts, how to enjoy what you have today. However, there are some challenges that typically only arise from substantial wealth. If you have high-net worth – here’s a few things to think about:

  1. Your Asset Allocation – if you’ve got more than you reasonably think you’ll spend in this lifetime, there’s a natural tendency towards investing conservatively. We’re not advocating for investing beyond your level of risk tolerance, but investing too conservatively can shortchange long-term returns and potential charitable gifts and generational wealth transfer.
  2. Your Estate Inventory – keep an up-to-date inventory of your collectibles and their monetary value. Many collectibles perform well over the years, and items like jewelry, family heirlooms, and antiques are priceless sentimentally. Have prized possessions appraised and keep a catalog with other necessary insurance documents and photographs of pieces together. This can help with estate transfer, liquidity, and taxes down the line too. 1
  3. Your Equity Positions – evaluate your unique risk if you’ve accumulated large stock positions in the company you work with. 2
  4. The DIY Mentality – chances are - you’re wealthy because you’ve worked hard and are highly intelligent. Many business owners and physicians achieve great levels of success professionally because of this. But navigating complexities of your wealth can require different skills. If you’re not interested in educating yourself and the continued obligation of managing your investments – seek a financial professional.
  5. How Many Advisors You Have – affluent investors often place assets with multiple managers believing this creates better results. But when you’re affluent, the greatest priorities for managing your portfolio are tax efficiency and risk management. If you’re working with multiple advisors that don’t work together, you might be leaving money on the table. Without a reaching view into the big picture, independent actions by different advisors, with the best of intentions, will still fail to maximize tax efficiency and exposure to risk.

1. the value of collectibles can be significantly affected by a variety of factors, including economic downturns or markets that have little or no liquidity. There is no guarantee that collectibles will maintain their value or purchasing power in the future

2. keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost

Portions of this material were prepared for Marketing on Demand & FMG Suite use. The content is developed from sources believe to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state, or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Copyright 2018 FMG Suite.

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