We often think that the wealthy make their money primarily through stock market investments, but there are plenty of other ways that the wealthy put their money to good use.
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“While investing remains the predominant method of wealth creation, there are many other (more creative) ways that the wealthy use to grow their money,” says Kevin Huffman, owner of Criminal Trading. Here are some of the top ways they grow their money.
Leverage your business
“Many wealthy people use at least some of their wealth to start a business,” Huffman says. “If the business is successful, it creates a steady income stream, increases in value, and can be sold at a large profit.”
intellectual property
Owning copyrights, patents and trademarks can be a lucrative business, Huffman explained.
“The ultra-wealthy can also invest in creating or owning intellectual property that can generate ongoing royalties or licensing fees,” Huffman said. “For example, musicians can monetize their music catalogs as a revenue stream through streaming services.”
According to Rhett Stubbendeck, CEO and founder of Leverage Planning, creating intellectual property requires not just an investment of money, but also an investment of ideas.
“For example, one of our clients developed and patented a unique financial planning tool that now generates a steady royalty income,” says Stubbendeck. “It's a great way to increase both revenue and reputation.”
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Paying for time-saving services
The wealthy typically have packed schedules: every minute they spend on mundane tasks like cleaning, cooking, and running errands is a minute they could be spending on more valuable activities, like growing their business or spending quality time with their loved ones.
For this reason, many wealthy people choose to invest in services that can save them time so they can focus on what matters most. This could include hiring a personal chef to prepare healthy meals for them, a housekeeper to keep their home clean, or a personal assistant to manage their daily tasks and errands.
While these services may require significant upfront costs, the long-term benefits can be huge: They free up the wealthy to pursue higher-value activities that generate greater income and build lasting wealth.
Private financing
Private loans are another strategy used by the wealthy, according to Stabendek.
“It's a loan secured by real assets and offers higher yields than traditional options,” Stavendek says. “Annual yields range from 8% to 12%. It's a powerful way to diversify and strengthen your investment portfolio.”
Skills Development and Personal Training
According to David Blain, CEO and founder of BlueSky Wealth Advisors, another key strategy often adopted by high net worth individuals is systematic investment in skill development and personal education.
“Unlike direct financial investments, investing in personal and professional growth can pay dividends in the form of increased revenue and potentially innovative business ideas,” Brain said.
He says continuous learning, including advanced courses, exclusive workshops and strategic networking events, allows individuals to stay ahead in their fields and take advantage of new opportunities that are inaccessible through traditional market investments.
Building a strong network
One of the most beneficial ways wealthy people put their money to work is by building a strong network of influence. Nurturing relationships with other successful people gives you access to valuable opportunities, insights, and resources that can help you exponentially grow your wealth.
This can include joining exclusive business or social clubs, attending high-profile events and conferences, or simply making an effort to connect with and learn from other successful entrepreneurs and investors.
Strategic Philanthropy
Finally, Blaine notes that many wealthy individuals practice strategic philanthropy.
“By setting up or donating to a foundation, you can not only satisfy your philanthropic desires, but also achieve significant tax savings,” Blaine said.
“While I was in office, [my company]”Guiding clients in establishing charitable trusts and foundations has proven to be a powerful way to manage large estates and ensure long-term asset preservation and social impact,” he added. “This approach not only helps with tax planning, but also helps solidify family legacies and influence.”
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This article originally appeared on GOBankingRates.com: 7 Ways Rich People Make Their Money Work for You (Beyond Investing)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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