Where do Wealthy people keep their money ?

talexuser

Frankly you would have to be mad to keep a million in cash in this inflation, unless you had so much more it did not matter, or just wanted to buy a Bugatti tomorrow.

Desk

talexuser said:

Frankly you would have to be mad to keep a million in cash in this inflation, unless you had so much more it did not matter, or just wanted to buy a Bugatti tomorrow.

What would suggest is a better option than cash?

Savings accounts are the guaranteed return you won’t get from equities just now, and who knows what the looming economic crisis is going to do for the value of property?

Albermarle

Savings accounts are the guaranteed return you won’t get from equities just now, and who knows what the looming economic crisis is going to do for the value of property?

Savings accounts are a guaranteed loss in real terms, due to inflation.

Nobody knows the future return from equities, but historically they have beaten inflation over the long term.

Nobody knows about property.

As no option is great, best to have a diversified base for your money ( and hope for the best) 

Chickereeeee

Grumpy_chap said:

Albermarle said:

So for a couple who do not have  public sector pensions, then a Million Pounds is the 'necessary' amount to have a good , but not luxurious retirement.

Yes, this is the cruel irony of the LTA.  It is set at barely more than a £1M (because we must punish "the rich", yet that will result in an income around £50k which is far from "rich".

The LTA is just the level to which the State is willing to 'help' you save for retirement. So no, it is not intended to help you become rich.

Nothing to stop you saving for retirement outside of pensions, including in ISAs. 

bostonerimus

Chickereeeee said:

Grumpy_chap said:

Albermarle said:

So for a couple who do not have  public sector pensions, then a Million Pounds is the 'necessary' amount to have a good , but not luxurious retirement.

Yes, this is the cruel irony of the LTA.  It is set at barely more than a £1M (because we must punish "the rich", yet that will result in an income around £50k which is far from "rich".

The LTA is just the level to which the State is willing to 'help' you save for retirement. So no, it is not intended to help you become rich.

Nothing to stop you saving for retirement outside of pensions, including in ISAs. 

I agree. The range and size of tax free saving and investing opportunities in the UK is generous. Anyway the rich really don't worry about LTA etc. as they have other ways to avoid tax by offshoring and using the residency rules to their advantage.

Albermarle

The LTA is just the level to which the State is willing to 'help' you save for retirement. So no, it is not intended to help you become rich

You are right, the LTA is just a way of limiting how much you can benefit from pension tax relief at 40% ( as most LTA 'victims' will have almost certainly benefitted from very generous higher rate tax relief) 

Whether it is a good way to do that can be debated, but the intention to avoid tax relief abuse is fair.

mark_cycling00

what I'm learning from this thread is as follows:

We are frequently told that the wealthy keep getting wealthier despite economic set-backs. So I think the OP wanted to know what the wealthy are doing to keep their cash safe and protected from inflation.

1. there are no secret savings accounts for rich people that pay 10% inflation-beating interest 
2. there are no secret, reliable investment funds that promise to do the same, that only rich people can buy into
3. the wealthy don't have some secret knowledge about safe investments and have all invested their cash in something like Chilean mining companies. They are probably as confused as the rest of us. I got Chilean mining from the Murray IT investments for an example. 
4, There are some tax-efficient ways to invest if you have lots of cash but these involve a high degree of risk where you could lose everything on 90% and hope to win this back and more on the remaining 10%. There is nothing safe about these things, especially in a recession+war situation.
5. There is rumoured to be "off-shore" accounts but you still need to earn income on your cash in order not to pay income-tax. 100% of nothing is the same as a fully-taxed nothing.

the concept of "wealthy" is an aggregation of lots of different types of people and lacks granular detail. 
I imagine that the majority of "wealthy" (let's say >£1million) are losing money right now just like the rest of us. 
Let's estimate that at 60%

About 30% of the rest outsource all their worry to financial advisors and will perhaps keep track with inflation if they are lucky.

The remaining 10% will create or invest in new businesses that will probably seem illogical to the rest of us. And these people will make lots more wealth. It will statistically look like the wealthy have got richer, but in reality it was just a small proportion.

Apodemus

Mark,  you are missing private equity funds from your listing.  There are a lot of good, profitable companies that are wholly-owned by wealthy individuals or groups of them and not listed on the markets.  These can be lucrative sources of income in hard times. 

Albermarle

Apodemus said:

Mark,  you are missing private equity funds from your listing.  There are a lot of good, profitable companies that are wholly-owned by wealthy individuals or groups of them and not listed on the markets.  These can be lucrative sources of income in hard times. 

Plus you do not have to own a large company to be wealthy. In my job I had quite a few customers that were soley owned by the entrepreneurs who started them. Typically would be manufacturing companies with say 100 to 200 employees. These people were pretty sharp and often sold out to bigger organisations at a peak for many Millions, and then started a new company but this time with a bulging bank account.

jimjames

Daliah said:

MX5huggy said:

 Has anyone ever lost deposits in a UK bank ? 

You don't appear to have had money in outfits that went bust. FSCS has saved many people from losing money. £584m just alone in 2021/22, and £26.5bn since 2001. The idea that banks are as safe as houses went out of the window in 2008.

I suspect much of that money would have been compensation for the likes of LCF that went bust rather than retail banks. I agree that the £85k limit is something that should be considered but I don't think the FSCS data from 2021 backs it up as being needed for bank accounts.