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A lot of people aspire to be financially wealthy. Aside from working hard to save money for the future, people often get inspired by stories of luck and fortune, particularly those who won the lottery and other rags to riches personalities such as businessmen and some professional athletes. Indeed, dreaming that someday one would sleep in a room full of money is something that should be earned through hard work and perseverance.
People often believe that becoming rich would be the solution to all financial problems. However, there have been stories in which people have gone the rags to riches route, only to go back to rags again. Lack of maintenance, as well as overspending of finances, are often the causes of such downward spiral. It is therefore definitely hard to hold on to wealth as much as earning it.
Fortunately, there are five ways on how a wealthy person can protect his or her own wealth. Here are some of them:
- Challenge the IRS. Being wealthy means paying high income tax rates, and the IRS may collect a share of one’s wealth after he or she dies. In order to avoid losing wealth, taking advantage of IRAs and 401(k)s should be considered. Also, the wealthy person may have to consult with an estate attorney capable of laying out a well-structured plan to help lower down the estate taxes owed.
- Any legal liabilities should be avoided. A wealthy person is more likely to lose large sums of money, especially if he or she loses a car accident or slip and fall lawsuit. It is best to avoid such legal liabilities. Beforehand, though, he or she must ensure that his or her insurance coverage is enough.
- Invest at your own risks. Being wealthy also means having access to investments that are considered too risky. Such investments might just be fraud, therefore incurring large amounts of financial losses. Indeed, trying to accumulate more wealth is a challenge. But then, taking advantage of safe investments right away is a good way to start, as well as leaving money that can be afforded to lose.
- Reorganize finances after getting wealthy. This step is vital in order to prevent any losses that one has gained. It is never a good thing to keep on borrowing money just to obtain even more wealth, which is why at the first instance of being at the “well-off” status; the person must be able to pay down any debt.
- Think of the future. Retiring at the right time won’t be a fruitful one if the wealthy person spends too much in an effort to preserve status symbols. Running out of money just in time for investment on nursing homes or long-term medical care is a very bad situation to be in. This is why investing for the future should be a priority at the onset of being wealthy. What is a life lived in luxury right now if you do not have plans for the future?
It is really hard to maintain a wealthy status the same way as earning it. Taking these tips to mind, however, would enable any aspiring person to grab on to his or her wealth at the longest possible time.
Author Bio: Steven Boccone is a New York-born economist, financial analyst and manager. He has worked for various financial institutions worldwide and currently manages a US-based global marketing company. He is an art lover, a traveler, and he maintains his own business blog.