Latest news with #affluentfamilies
Yahoo
25-07-2025
- Business
- Yahoo
5 Ways the Wealthy Put Their Money To Work That the Middle Class Can't
Wealthy people often operate in a completely different financial world than the middle class. They have access to exclusive investment vehicles, unique tax-friendly strategies and investment structures, to name a few differences. And many affluent families can take advantage of financial tools that help them grow, protect and transfer wealth in ways most Americans simply can't. Learn More: Read Next: 'Middle-income individuals can build wealth in the areas where they have access (for example, low-cost, exchange-traded funds) just like the wealthy but may not have enough to put money into more alternative investments like private equity or hedge funds,' said Richard McWhorter, managing partner and private wealth advisor with SRM Private Wealth. Experts explained what the wealthy can do that the middle class can only aspire to. Access to Exclusive Investment Vehicles Wealthy investors often have access to private equity, hedge funds and other 'alternative investments,' which typically require high minimums or accreditation, McWhorter said. These opportunities are usually out of reach for middle-class investors. Most of the investments within the alternative investment bucket (hedge funds, private equity, venture capital) are not available due to certain criteria to be accepted and/or minimum investments imposed by the investment sponsors, McWhorter said. Even if these investments are volatile or don't have a quick return, wealthy investors have the financial padding to take on that risk without threatening their basic needs. 'They might have less leverage that can be impacted during this time as well,' he added. Find Out: The Long-Term Advantage Because wealthy individuals don't rely on their invested assets for day-to-day expenses, they're able to invest for the long term and potentially get higher returns over time. 'This means that affluent individuals can begin investing sooner, which translates into significantly higher returns over time, thanks to compounding dividends and returns,' said Leslie Kehoe, managing director and senior wealth strategist at CIBC Private Wealth, US. Advanced Financial Structures Wealthy individuals also benefit from unique financial structures like trusts, donor-advised funds and private foundations, McWhorter explained. These structures offer tax advantages and greater control over how their wealth is invested and transferred. 'Wealthier people have more funds to lock away in a trust structure or to donate monies to a donor-advised fund than those with less wealth as it could impact their standard of living,' McWhorter said. 'Trusts are central to many strategies,' Kehoe said. She explained that different types of trusts — such as Grantor Retained Annuity Trusts (GRATs), Spousal Lifetime Access Trusts (SLATs) and Dynasty Trusts — can help reduce estate taxes, protect assets from creditors and facilitate tax-efficient wealth transfers across generations, keeping money in wealthy families. Charitable Strategies and Tax Efficiency Charitable giving is another area where wealthy individuals have a great ability to take advantage of the financial benefits of their philanthropy. Vehicles like donor-advised funds, private foundations and charitable remainder trusts can help reduce taxable income, defer capital gains and establish long-term giving plans. 'These strategies aim to … ensure a smooth and tax-efficient transfer of wealth across generations — all within the framework of U.S. tax compliance,' Kehoe explained. Family Offices and Comprehensive Planning Some wealthy families also protect their wealth by using private family offices — essentially in-house financial firms — to manage their wealth. These offices handle everything from estate planning to portfolio management and then some. 'These offices help structure portfolios to take advantage of tax-efficient investments and use entities like LLCs or partnerships to consolidate control and manage income and estate tax exposure,' Kehoe said. While most middle-class investors won't have access to such services, it's still possible to hire financial advisors and planners for strategic support. 'Aside from valuable advice that often limits liabilities and risk exposure, having a strong relationship with a wealth advisor can help individuals craft a highly customized financial strategy to meet the specific goals of their clients,' she added. What Middle-Class Investors Can Do While the average middle-class investor may not have access to these elite financial tools, they still have meaningful ways to grow wealth. Experts emphasized consistency, planning and leveraging accessible vehicles like retirement accounts and low-cost index funds. 'They should still continue to build their wealth with the tools available to them, which,' McWhorter said, 'are ample.' More From GOBankingRates Are You Rich or Middle Class? 8 Ways To Tell That Go Beyond Your Paycheck This article originally appeared on 5 Ways the Wealthy Put Their Money To Work That the Middle Class Can't
Zawya
18-06-2025
- Business
- Zawya
South Africa: Nedbank Private Wealth launches NexLegacy initiatives to tackle the wealth transfer challenge
One of the greatest challenges most high-net-worth families face is not how to create wealth, but how to pass wealth on successfully. Research shows that generational wealth often fades within three generations, not because the money disappears, but because the knowledge and habits required to manage it are never fully transferred to future generations. Nedbank Private Wealth is now addressing this issue with the launch of its NexLegacy initiative – an innovative approach designed to teach children* from affluent families how to build, protect, and grow wealth throughout their lives. NexLegacy is an interactive learning experience designed to introduce children aged between 7 and 18 years old to basic financial concepts in a fun and engaging way. NexLegacy aims to transform the way the next generation understands wealth planning and education through interactive challenges, practical tasks, and mentorship – all designed to turn banking and investment concepts into real-life skills. According to Bodibe Sebolai, head of client value proposition at Nedbank Private Wealth, children attending NexLegacy initiatives won't just learn how to budget; they'll gain first-hand experience in setting goals, and the value of tracking savings, and understanding how interest works. They will also learn the difference between growing and preserving wealth, and why the latter is crucial for maintaining wealth over time. "NexLegacy is about equipping the next generation with the tools and mindset to be more than beneficiaries," Sebolai says. "It's about helping them step into their future roles as custodians of their family's legacy with confidence." Recently, Nedbank Private Wealth hosted its first NexLegacy cohort for children between the ages of 7 and 12, bringing together selected clients and their children for a one-of-a-kind, curated day of discovery, learning, and growth. And it's just the beginning. With NexLegacy, Nedbank Private Wealth is setting a new benchmark for how banks support families, not just with products but with purpose. "This is more than a camp; it's a strategic intervention," Sebolai concludes, "designed to build habits early and create a new generation of wealth stewards who are ready to lead." The initiative formed the first major launch event under the broader family offering proposition and NexLegacy will evolve to support young people through various life stages – from childhood to adulthood. The programme is set to continue as an annual series, reinforcing the long-term value of early financial education. This approach reflects Nedbank Private Wealth's belief that wealth planning stewardship should start young, not just with a conversation, but with action. By introducing these concepts in an age-appropriate way through games, stories, and interactive simulations, children gain financial knowledge and develop good money habits long before they inherit assets. For parents, NexLegacy represents more than a fun day out for the kids. It's an investment in their children's future, rooted in the understanding that wealth without knowledge is fleeting. The programme draws directly from Nedbank Private Wealth's broader family banking philosophy, which is built on the understanding that wealth planning works best when it includes the whole family. From strategic succession planning, the bank helps clients manage their wealth as a unit, building a financial legacy that's robust and resilient. "Our clients have told us they want to do more than preserve wealth; they want to prepare their children to manage it responsibly," says Sebolai. "NexLegacy helps them bridge that gap in a way that's memorable, practical, and deeply relevant." Unlike generic financial education efforts, NexLegacy is designed specifically for high-net-worth families who want to ensure that the next generation is not just financially literate, but also financially confident. It brings the bank's most experienced wealth specialists into the learning process and aligns seamlessly with core banking, investment, and planning services. By delivering this experience through a combination of digital tools and real-world events, Nedbank Private Wealth ensures that wealth education is not an afterthought, but a foundational offering.
