Where do Wealthy people keep their money ?

Albermarle

mhoc said:

There is probably more people with assets of over 1 million especially post-covid - a home in London or the home counties, a holiday home, a business, various pensions , a few ISAs, premium bonds plus the usual cars, boats etc

Having a Million Pound in assets as a household hardly gets you into the Top 10%, if you include pensions and family home.
You need about £2M ( as a household) to even get in the Top 5%. Despite popular perceptions, pension wealth is higher than property wealth and cash is only a small %.

mark_cycling00

The amount of cash wealth as a proportion of total wealth drops significantly In the top 10% bracket, 
Much much less cash held (proportionately) as you reach the top 1%. 

The is an indication of the attitudes that makes you very wealthy.

There's incone-tax-free-ish venture capital and crowdfunding if you meet certain criteria plus funding new businesses and getting entrepreneurs tax relief on disposal. 
I guess they do a lot of this.

bostonerimus

Those with generational wealth often have money in trusts which invest in a range of things from investment funds, bonds and the more rarified worlds of hedge funds and venture capital. I once worked for a small company that was 51% owned by a venture capital company run by some ex Honeywell executives and lawyers with a pool of money drawn from rich families. They wanted big returns quickly and were always pushing and asking for some corners to be cut - I left soon after they took the majority stake.

Bacman

"Where do wealthy people keep their money?" - tax-free offshore accounts unfortunately so the poorer people like us have to pay more tax

Albermarle

mark_cycling00 said:

The amount of cash wealth as a proportion of total wealth drops significantly In the top 10% bracket, 
Much much less cash held (proportionately) as you reach the top 1%. 

The is an indication of the attitudes that makes you very wealthy.

There's incone-tax-free-ish venture capital and crowdfunding if you meet certain criteria plus funding new businesses and getting entrepreneurs tax relief on disposal. 
I guess they do a lot of this.

The stats show that for households with lower levels of assets, then property and pension comprise around 80% of total wealth. Even those with a couple of Million in assets, then these assets are predominantly still held in property and pension ( 70%). However when you start getting to the Top 1% /£5 million +, then property and pension is less than 20% combined. The rest is split between financial investments and business ownership.

Millyonare

Once one gets into the private banking world, of £1m liquid cash and above, excluding pensions, it tends to follow roughly the old mantra of "a third, a third, a third".

Cash = 34%
Property = 33%
Stockmarket = 33%

Raveloe

It is a good question and I agree with most of the posts here. My own experience and back-of-envelope calculations lead me to think that there is a point around the £5m net assets mark where it can become worthwhile to employ a wealth manager to preserve what you have and achieve future financial goals. Up to that point the wealth manager's nose in your trough consumes a disproportionate amount of what you have. Not a question that burdens me at the moment, but I am working on it.

bostonerimus

Millyonare said:

Once one gets into the private banking world, of £1m liquid cash and above, excluding pensions, it tends to follow roughly the old mantra of "a third, a third, a third".

Cash = 34%
Property = 33%
Stockmarket = 33%

As my net worth has increased the proportion of cash has gone down as I've kept it at being able to cover 2 or 3 years of spending. There was a time when 6 months spending in cash was 33% of my net worth, now 3 years of cash spending is a tiny percentage.

Albermarle

Once one gets into the private banking world, of £1m liquid cash and above, excluding pensions, it tends to follow roughly the old mantra of "a third, a third, a third".
Cash = 34%
Property = 33%
Stockmarket = 33%

Presume this also excludes the family home, so only money in excess of the family home and pension? 

Albermarle

Raveloe said:

It is a good question and I agree with most of the posts here. My own experience and back-of-envelope calculations lead me to think that there is a point around the £5m net assets mark where it can become worthwhile to employ a wealth manager to preserve what you have and achieve future financial goals. Up to that point the wealth manager's nose in your trough consumes a disproportionate amount of what you have. Not a question that burdens me at the moment, but I am working on it.

As a related point, I have seen comments on the forum before, that your local IFA should be comfortable handling clients with up to two, or even three Million Pounds in assets. (excluding the family home ) Presumably because they can be mainly handled via conventional, fully regulated means. However when assets go above that then someone more specialised in true wealth management is probably needed, probably more familiar with unregulated investments, investing offshore etc.
 Not something though that worries me either !