Where do Wealthy people keep their money ?

Nebulous2

This is anecdotal, based on my limited experience. I'm in a small town, cheaper than most, with what I think is more than our share of multiple millionaires. They found themselves with a huge amount of money from primary industry, selling farms and fishing boats, with the quotas/subsidies attached often worth more than the land or the boat. I know a few - some of them being distant relatives. 

We don't get into discussions about where they keep their money. When the cash first arrived in the 1970s it was very ostentatious. People who had lived and been brought up in poverty set out to spend. Since then it has become much more discrete, under the radar.

A lot of them have built houses to their own spec. Lots of German cars, a few Jags, very few Landrovers. A fondness for personal plates. Often foreign homes, sometimes two, Spain and Florida for example.  A fondness for cruises, I'm always surprised that after 20-30 years on the face of the sea ex-fishermen are still attracted to it. A lot of buy to lets. Quite a few of them put some of their cash from selling up into other businesses, possibly to get tax relief. Some became serial entrepreneurs, buy a hotel, refurbish it, sell it on and repeat. Very little conspicuous charity giving. The churches and local care facilities get some moderate anonymous donations. Big weddings. Trips to New York or Paris for wedding dresses and mother of the bride outfits. 

I often find it odd that people with 7,8,10 million hang around. They and their families are so embedded in the local community that they can't imagine being anywhere else. Some people left, again possibly for tax reasons, but returned later. 

Albermarle

Nebulous2 said:

This is anecdotal, based on my limited experience. I'm in a small town, cheaper than most, with what I think is more than our share of multiple millionaires. They found themselves with a huge amount of money from primary industry, selling farms and fishing boats, with the quotas/subsidies attached often worth more than the land or the boat. I know a few - some of them being distant relatives. 

We don't get into discussions about where they keep their money. When the cash first arrived in the 1970s it was very ostentatious. People who had lived and been brought up in poverty set out to spend. Since then it has become much more discrete, under the radar.

A lot of them have built houses to their own spec. Lots of German cars, a few Jags, very few Landrovers. A fondness for personal plates. Often foreign homes, sometimes two, Spain and Florida for example.  A fondness for cruises, I'm always surprised that after 20-30 years on the face of the sea ex-fishermen are still attracted to it. A lot of buy to lets. Quite a few of them put some of their cash from selling up into other businesses, possibly to get tax relief. Some became serial entrepreneurs, buy a hotel, refurbish it, sell it on and repeat. Very little conspicuous charity giving. The churches and local care facilities get some moderate anonymous donations. Big weddings. Trips to New York or Paris for wedding dresses and mother of the bride outfits. 

I often find it odd that people with 7,8,10 million hang around. They and their families are so embedded in the local community that they can't imagine being anywhere else. Some people left, again possibly for tax reasons, but returned later. 

In my job I met quite a few successful small business owners, mainly related to manufacturing building related products.
Although they did not all live in the same area, a lot of the characteristics you mention were the same. They stayed in the same area they had grown up in, built houses to their own spec. and a lot of luxury holidays. Also a tendency to sell up for Millions and start again.
One difference was that the vehicle of choice was often Top of the range Range Rovers.

B0bbyEwing

Albermarle said:

Nobody is trying to trip anyone up, not me anyway. 

I never said you was. I opened my previous post by saying I agree with you.

My point was really that the moment I made that comment, I knew there was potential for some to come & say 1 million isn't wealthy & paint a scenario where someone is still living payslip to payslip. Plenty of assets but no cash.

But as I said, I was responding to "1 million isn't wealthy" or whatever the line was. A very wishy-washy line that I'd argue Joe Bloggs would take as 1 million cash.

I said this because I know if you say the sky is blue, some here would argue with you that it's not blue at all, it's deep blue, or azure or cerulean (yep had to Google that one). Arguing just for the sake of arguing.

But I never said that you were doing that. I said I agreed with you - that it can mean different things. If the original person elaborated then I may have agreed with them but just to say "1 million isn't wealthy" is incorrect in my view.

VWPolecat

The super wealthy seem to be very well informed of looming financial trouble with countries and banks.  

uk1

Albermarle said:

Nebulous2 said:

This is anecdotal, based on my limited experience. I'm in a small town, cheaper than most, with what I think is more than our share of multiple millionaires. They found themselves with a huge amount of money from primary industry, selling farms and fishing boats, with the quotas/subsidies attached often worth more than the land or the boat. I know a few - some of them being distant relatives. 

We don't get into discussions about where they keep their money. When the cash first arrived in the 1970s it was very ostentatious. People who had lived and been brought up in poverty set out to spend. Since then it has become much more discrete, under the radar.

A lot of them have built houses to their own spec. Lots of German cars, a few Jags, very few Landrovers. A fondness for personal plates. Often foreign homes, sometimes two, Spain and Florida for example.  A fondness for cruises, I'm always surprised that after 20-30 years on the face of the sea ex-fishermen are still attracted to it. A lot of buy to lets. Quite a few of them put some of their cash from selling up into other businesses, possibly to get tax relief. Some became serial entrepreneurs, buy a hotel, refurbish it, sell it on and repeat. Very little conspicuous charity giving. The churches and local care facilities get some moderate anonymous donations. Big weddings. Trips to New York or Paris for wedding dresses and mother of the bride outfits. 

I often find it odd that people with 7,8,10 million hang around. They and their families are so embedded in the local community that they can't imagine being anywhere else. Some people left, again possibly for tax reasons, but returned later. 

In my job I met quite a few successful small business owners, mainly related to manufacturing building related products.
Although they did not all live in the same area, a lot of the characteristics you mention were the same. They stayed in the same area they had grown up in, built houses to their own spec. and a lot of luxury holidays. Also a tendency to sell up for Millions and start again.
One difference was that the vehicle of choice was often Top of the range Range Rovers.

Somewhat similar here.  I had a consultancy business that advised businesses often owner started h-tech.  Eventually relationships changed from advising the business and the owner of the business to mentoring the owner and the business advice being ancillary in pursuit of the owners agreed personal goals.  These people largely became personal friends as well as clients and that was because they said I thought weirdly!

As an example I had one friend who had started a highly successful hi-tec business and he had extraordinary wealth beyond both his dreams and even it seemed his knowledge.  On one of my few jaunts he invited himself and his partner to join us and during one lunch which lasted all day, I observed that he seemed to enjoy being an entrepreneur more than managing his corporation which he found a boring chore and I also told him I though he was a useless corporate manager, terrible to work for, got the worst out of people reporting to him but this was because he was an excellent entrepreneur and that perhaps he should find someone to take over the day to day management of the business so he could get on and do what he was good at and enjoyed. Entrepreneurs don’t make good administrators.  

He was shocked and went a bit quiet for a few days and then told me he agreed and so I found that person and he was given a trial, passed and he was now free.  He basically managed one person as non-exec chairman.  So what to do next?  I established with him that he didn’t need any more money but did enjoy starting up things.  I then established with him that he could derive much more reward and enjoyment by using his wealth and skills to pursue philanthropy rather than cash and that his big challenge was learning how to recalibrate and enjoy spending money rather than making it - which is what he then did.  He is now extremely happy and only has the odd outbreak of business starting which he then runs at arm’s length. 

To be fair this is a different league to simply “millionaire” but some of the basic principles are common about the desire for freedom to pursue happiness and fulfilment becomes more consuming when you’ve paid off the mortgage and can afford your food, heat, holidays, healthcare etc. And a million pounds in cash isn’t going to overly concern.

Another thing I believe that few really understand is how much joy is derived from giving to others.  Much more than spending it all on one’s-self. 

Millyonare

Grumpy_chap said:

Millyonare said:

Anyone with a private or public pension pot of £1m+ is in the top 3% of all UK adults. One is in a better position than 99% of all people on the planet. It is a very gilded position. 

That is very probably a meaningless statistic.  Both considered at the UK level or the global level.
It is not the "very gilded position" that you suggest - it would facilitate around £40k to £50 of annual income from retirement which is nice but by no means exceptional income level to have or aspire to for a comfortable retirement.

Consider the UK position, top 3% (although other posters mentioned 5%, the difference is not important) of individuals.  If the individual has all / bulk of the pension fund for the household (couple) then it is top 10%.  That is poor pension planning to have all the funds in one half of the household but also reality in many cases resulting from employee-linked pensions.

The trouble is, the "top 3% (or whatever) of all UK adults" is rather meaningless in the context of pension funds.
That entire group includes everyone from

• Student not yet had a job and pension fund zero
• 20yo first job and third pay packet making first pension contribution 8% of £20k for one month, that's £133 pension fund
• 67yo just about to retire - this is the time the individual will have the largest pension and the time that the £1m pot (or whatever the value is) becomes relevant
• 90yo with pension fund largely depleted

The critical assessment is the percent of individuals that have a £1m pension fund at the point just before retirement.

Now, consider that into the wider global expansion that has been suggested.  We see the same need to treat total pension asset value as a function relative to age / life-stage and also location.  The £1m may well be a far greater than average entry into retirement than the global average entry into retirement but what are the costs of living in those other global locations that are being considered?  Particularly, in the case of pensions, the costs of end-of-life care?  When my Father was looking for nursing home provision, the costs were £60k upwards per year.  

We should also not frown on those that have been prudent and reached a largely self-funding retirement.  Without these individuals having funds, the state funding would have to be massively increased and the state does not have the funds to do that.

Nah.

The average UK length of healthy retirement period (HRP) today is just 5 years.

The average UK length from retirement to death (RTD) is just 10-15 years.

Average retirement spending drops off a cliff at 70-75yo, as the body wears out and gets ready to expire.

A £1m pension pot, wisely invested, will deliver £100-200k a year from retirement to bad health and death, making the retiree among the top 1-5% of richest people in the country on annual income alone.

Anyone with a £1m pot is truly in a gilded position, both nationally and globally.

Zerforax

The FCSC 85k limit only helps you if a bank goes bust. It's rare (like Northern Rock).

A bank like Coutts is unlikely to go under so the rich probably are fine with leaving any cash there.

chucknorris

JGB1955 said:

I don't consider ourselves wealthy but our £1M + is split between property, ISAs (both S&S and cash) and lots of different savings accounts.  We were, until recently, asset rich and cash poor.  The cash has risen after an inheritance and we now consider ourselves 'too old' to add to our investment accounts.  Solution?  We're going to spend it until we get to below the £1M.

It is very subjective what 'Being wealthy' actually is, I would say that it isn't just how much you have, but also what your lifestyle is! For example our wealth fluctuates (and is invested in very diverse assets). But we only spend about £30-40k a year, yet our annual income is over £150k, and we have significant capital, and it is not going to diminish (I value doing things like going for a run or walk with my dog much more than going to an expensive restaurant, we don't have expensive foreign holidays because I will not go on holiday without my dog. He is a family member (not just a pet) and its as much about him as us, so we only do UK cottage holidays, so overall I would say that makes us quite wealthy, but someone with more capital, but with a more lavish lifestyle and costs might not be considered as wealthy. We have no mortgage (on our home) or significant commitments or dependents, and we also have reasonably significant index linked defined benefits pensions.

Albermarle

Millyonare said:

Grumpy_chap said:

Millyonare said:

Anyone with a private or public pension pot of £1m+ is in the top 3% of all UK adults. One is in a better position than 99% of all people on the planet. It is a very gilded position. 

That is very probably a meaningless statistic.  Both considered at the UK level or the global level.
It is not the "very gilded position" that you suggest - it would facilitate around £40k to £50 of annual income from retirement which is nice but by no means exceptional income level to have or aspire to for a comfortable retirement.

Consider the UK position, top 3% (although other posters mentioned 5%, the difference is not important) of individuals.  If the individual has all / bulk of the pension fund for the household (couple) then it is top 10%.  That is poor pension planning to have all the funds in one half of the household but also reality in many cases resulting from employee-linked pensions.

The trouble is, the "top 3% (or whatever) of all UK adults" is rather meaningless in the context of pension funds.
That entire group includes everyone from

• Student not yet had a job and pension fund zero
• 20yo first job and third pay packet making first pension contribution 8% of £20k for one month, that's £133 pension fund
• 67yo just about to retire - this is the time the individual will have the largest pension and the time that the £1m pot (or whatever the value is) becomes relevant
• 90yo with pension fund largely depleted

The critical assessment is the percent of individuals that have a £1m pension fund at the point just before retirement.

Now, consider that into the wider global expansion that has been suggested.  We see the same need to treat total pension asset value as a function relative to age / life-stage and also location.  The £1m may well be a far greater than average entry into retirement than the global average entry into retirement but what are the costs of living in those other global locations that are being considered?  Particularly, in the case of pensions, the costs of end-of-life care?  When my Father was looking for nursing home provision, the costs were £60k upwards per year.  

We should also not frown on those that have been prudent and reached a largely self-funding retirement.  Without these individuals having funds, the state funding would have to be massively increased and the state does not have the funds to do that.

Nah.

The average UK length of healthy retirement period (HRP) today is just 5 years.

The average UK length from retirement to death (RTD) is just 10-15 years.

Average retirement spending drops off a cliff at 70-75yo, as the body wears out and gets ready to expire.

A £1m pension pot, wisely invested, will deliver £100-200k a year from retirement to bad health and death, making the retiree among the top 1-5% of richest people in the country on annual income alone.

Anyone with a £1m pot is truly in a gilded position, both nationally and globally.

The average UK length from retirement to death (RTD) is just 10-15 years.

I think the average retirement age is 62 and the average life expectancy of someone retiring at that age is about 85.
So 10 - 15 years is an underestimate.
As to years of healthy retirement, I have no idea but I guess that this is affected by the definition of healthy. Many older people would accept some health issues as ' just getting old' and not class them as poor health as such.

DavidT67

Zerforax said:

The FCSC 85k limit only helps you if a bank goes bust. It's rare (like Northern Rock).

A bank like Coutts is unlikely to go under so the rich probably are fine with leaving any cash there.

Northern Rock didn't actually go under, nor did they utilise the FSCS protection. The then Labour UK Govt underwrote all deposits.

Bradford and Bingley did go under and utilised the FSCS.

RBS technically failed, the UK Govt bought the bank. 

Coutts is part of RBS now NatWest bank group, but holds a separate banking license.