Where Do Wealthy People Keep Their Money?

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So, if you didn’t know already, there’s a key difference between being rich and wealthy. Rich people have money but their money doesn’t really work for them. They have to work for their own money. Wealthy people on the other hand, have assets that generally helps them make more money. Sometimes they have so much money that they have to think of different ways to keep their money. And no, it’s not going to be in the form of straight up cash. They’re most likely going to invest it elsewhere. And this is when you start using these finance terms like “diversification.”

If you think millionaires and billionaires are keeping their money in one bank or in multiple banks, you’re probably right. But they are for sure not keeping millions and billions of dollars inside a bank. They’ll have a small percentage of it because most banks are FDIC insured of up to $250,000 in a bank. So, if you’re a multi-millionaire that’s not going to cut it.

But instead, they could have a ton of money in their own business or company or just simply setting up a corporation will help protect their money. This is where you see billionaires like Jeff Bezos or Elon Musk have most of their wealth in. They own a lot of shares of their company so on paper it makes them super wealthy. And if they were to put 1 billion dollars into a bank, I don’t think any bank will insure that amount. At that point, you could probably start your own bank. So yeah, it’s just better to have it within the business.

But beside owning your business, most wealthy people keep their money in real estate. Why? Because you get cashflow and equity from appreciation. Like I said earlier, wealthy people have assets that helps them make more money. So, if they have a lot of money, they won’t just put it in a bank and let it sit there making a fraction of a percent in interest. Instead, they’ll rather dump their money into real estate and make more than just that fraction of a percent. And just those two factors, cashflow and equity, can tremendously help grow their wealth overtime.

Although buying real estate is really good for people to invest in. Sometimes, people like to diversify and keep their money elsewhere. For example: stocks, mutual funds, owning other businesses, retirement accounts, bonds, or basically anything that makes them money. This way, they could literally have millions of dollars just kept and tucked away into different forms of assets and if they ever need the money they’ll just pull it out from those assets and convert it to cash to do whatever they need to do.

Generally speaking overtime, these assets will only grow and grow and when the compounding effect kicks in. They’ll be wealthier than they started.

And sometimes when you get too wealthy, some people don’t want to let others know that they are wealthy so they create a trust to hide their wealth. A trust is basically just a legal contract on how their assets should be managed whether they’re alive or dead. And if it’s structured properly, people won’t be able to find out which specific individual owns the asset. You don’t have to be super wealthy to do this, but a lot of wealthy individuals do, do this. And if you’ve heard of the term trust fund baby. That just means that someone is already managing the asset and when the baby is born, they are born with a silver spoon in their mouth. But I’m not saying that all trust fund babies are wealthy. The trust could literally be structured where they receive a couple of dollars a month. Although that is good consider you don’t have to work for it but you won’t see all of them driving Lambos and wearing designers brand every day.

Although it’ll be really cool if I was born into wealth. But it is what it is. I’m just thankful that I have a roof over my head and food to survive. I just have to continue working hard and one day. I too will have that money printing machine.

Overall, to sum this all up, wealthy people keep their wealth in assets or income producing assets. And if you would like to one day be wealthy too, maybe consider owning some for yourself. If you’re curious on what are the best assets to own to build wealth. I have a video where I talk about the 5 best assets to own. Check this video out:

5 Best Assets to Build Wealth

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