A Chart that tells everything that is wrong with your investments
2016 Survey of Consumer Finances looked at composition of wealth of middle Income, upper Income, and ultra rich. Below is the chart made by VisualCapitalist.com
Ultra Rich keep low equity position in their Primary Residence
In 2012, Mark Zuckerberg took out 30-year mortgage on his Palo Alto house. Why? Because ultra rich know that their primary residence is not an asset. Equity tied in their house can instead be invested elsewhere for higher returns. On the other hand, middle and upper income people want to pay off their mortgage as soon as possible.
Ultra Rich do not contribute to Pension Accounts
Upper income people (you may be one of them) have bigger pension account than both middle income and ultra rich. Middle income people likely don’t have enough disposable income. But ultra rich understand how Wall Street steals from pension accounts. That’s why they look elsewhere to grow their Wealth.
Ultra Rich have 50% of their wealth in Real Estate and Business
This is where it gets interesting. Ultra rich know how business and real estate are tied together. McDonald is famously know to make most of its money from Real Estate, not by selling Hamburgers. Some of the best incentives in tax code are reserved for real estate and business. This is how ultra rich pay less in taxes than most. This is not a bug, rather this is a feature of tax code. Ultra rich are just like you and me but they have learnt how to play the game.
What can you learn from Ultra Rich
You have to get involved in Real Estate at business level. Operative words being “at business level”. You cannot do that with single family rentals. Easiest way for busy high-paid professionals to get involved in real estate at business level is through Passive investing.
P.S. High-paid professionals are always wondering where to invest their savings. They don’t want to take more risks with stocks because they already have a lot of money invested in the stock market. Not knowing where to invest, they end up with lazy money sitting in a bank.
At Wealthy Together we help high-paid professionals grow wealth by teaching Passive Real Estate Investing. Sign up for FREE E-Mail Education Series and make more money with less risk.