This is an account of a wealthy man.


I am worth ~$50M so I guess I am qualified to answer this question.

Rich people have various ways to manage their wealth. Some people don't actually manage it. They focus their energy on spending it. For me, I opt for simplicity.

Here is how I divide my investments.

- $20M in Vanguard index funds.

- $20M in concentrated stock positions from my company and some calculated bets.

- $7M in real estate including primary residence. I don't hold any mortgages.

- $3M in alternative investments. Venture capital, angel investments and etc.

Most of my investments don't require much time to manage except for the alternative investments. But it's a small percentage so I don't worry about it too much. I also avoid depreciating assets like vacation homes, boats or jets. I like them. But I mostly rent them. It can cost a lot to rent but it's still cheaper than owning.

As for spending, I budgeted my spending excluding income tax to be <1% of my liquid net worth. ($360K to be exact.) It's very doable when the house is paid for. I put most bill paying on automation with credit cards and household payroll services (We have 2 baby sitters and 1 house keeper). I also consolidated all the activities to two bank accounts. I don't spend much time on managing the bills because they are very straightforward.

As for taxes, I spent a lot of time understanding income taxes so I am a very tax savvy person at this point. A big part of managing my finance is to minimize taxes and I have done a decent job except for residing in California, which I believe is worth paying for. I have also reached the point that I don't mind paying more taxes because that's a luxury I could afford.

As for philanthropy, I setup a $3M foundation and give away over $150K+ a year from that. My focus is anti-poverty, education and empowerment. I setup a college scholarship at my alma mater. I give grants to organizations who are making good progress in the focus areas. This is a bit time consuming but I enjoy investing my time and money to make the world a better place. I plan to scale up this effort after I retire.

We try to live a very low key life and I would turn down money requests from friends and family. I told them I am happy with getting a low return from index funds so no business proposals. I can help with hardships or education but I am not interested in offering them a luxury life style. No one really bluntly asked for money at this point. I suppose they think we are only modestly wealthy. I actually like that.

So here is my data point. I imagine there is a big variation on how wealthy people manage their finances. Also, I will never never give my money to a big bank wealth management arm. I worked with one of them shortly. It drastically underperformed the market by making thousands of trades while earning a lot of commission from expensive mutual funds like Blackrock. They even tried to buy me some illiquid hedge/PE funds although I told them I didn't want that. (I had to give them discretion.) I broke up with them pretty swiftly. Their behavior was disgusting.

Hmm, interesting and very educative.

Lies

I read this on Quora. Truth is richmen don't dabble into shiit stuff like leveraged forex or binary options.