4 Financial Questions New Millionaires Should Review and Solidify
Currently, in the U.S., there are nearly 24 million millionaires, many of whom you can better have a better investment strategy than your average Joe.
While you can imagine there are some lessons in following their lead, it turns out that a lot of newly wealthy people make avoidable mistakes that either stall their wealth or shrink it. Here are four investing question marks worth revisiting if you've recently crossed into millionaire territory.
Rachel Cruze: 7 Easy Ways To Manage Money So You Can Grow Your Wealth
For You: 9 Subtly Genius Things All Wealthy People Do With Their Money — That You Should Do, Too
How Is Your Tax Planning?
Getting rich is one thing. Keeping what you've made, after taxes, is another. Poor tax planning can set you back more than you think.
That means successful investing involves more than just picking the right variety of asset classes. You also need to invest in a way that makes the most financial sense, which means paying special attention to the tax implications.
Failing to adopt tax-efficient strategies can "erode wealth over time," according to Avidian Wealth Solutions, a Texas-based boutique investment firm. For example, it explained that some investors who have large dividend-paying stock portfolios often overlook the tax implications of the dividends.
"Without proper tax planning, they could face a substantial annual tax bill, diminishing the overall return on their investments," Avidian noted.
Are You Ignoring Conventional Investment Strategies?
The good news is that you’ve struck it rich, but the bad news is that you think you don’t need to follow the same model as your older peers. However, with so much money pouring into cryptocurrency, real estate, private equity and business startups rather than stocks and bonds, the financial tides may not be flowing in your favor.
"The desire to push against conventional wisdom is a really important developmental stage," Brad Klontz, a certified financial planner (CFP) and professor of financial psychology at Creighton University, told CNBC in an interview. "Young people on social media tell me that [traditional investing advice] isn't the way it's done anymore. Everything's changed."
The problem is, ignoring conventional wisdom often means you're not doing enough to ensure long-term financial security. "When it comes to some of the tried-and-true approaches to investing, it really is a long game," Klontz said. "And when I hear people talk about crypto and alternative assets, that's much more of a short-game mindset."
Explore More: Enter for a Chance To Win $500 in MoneyLion's Summer Break Giveaway (No pur. nec. Ends 7/4/26. See Official Rules at mlion.info/summerbreakofficialrules)
Do You Feel Obligated To Invest in Your Family or Friends' Business?
Oh, you just made some money? Well, buckle up as the pitches start rolling in. A cousin with a startup, a friend's restaurant, a former co-worker's pyramid scheme real estate venture.
It can feel rude or disloyal to say no, but that social pressure is exactly what gets newly wealthy people into trouble, so you kind of have to set boundaries. Plus, you should treat every investment the same, regardless of who owns it.
Do your due diligence and make sure the business is on a solid financial footing and can produce the kinds of returns necessary to help you grow your wealth. If not, don't feel guilty about walking away.
Are You Hiring the Right Financial Advisors?
Another mistake newly rich people make is not getting the right kind of financial advice from the right professionals. The wealth advisor who helped steer you to a certain level of financial comfort might not be the best option when you suddenly find yourself with millions of dollars to manage.
When you attain a certain level of wealth, you want advisors with a successful track record at navigating increasingly complicated tax, investment and risk-management strategies.
"High-net-worth investors often underestimate the value of professional guidance in managing complex financial situations," Avidian noted. "Attempting to handle wealth management alone or relying on general financial advice can result in missed opportunities and costly errors."
Vance Cariaga contributed to the reporting for this article.
To help Americans navigate the added cost of summer, MoneyLion is giving away $1,000 every day through July 4. Enter the Summer Break Giveaway here (No pur. nec. Ends 7/4/26. See Official Rules at mlion.info/summerbreakofficialrules)
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion:
