Where Do Millionaires Keep Their Money?

Millionaires don’t just let their money sit in one place. They spread it across different assets, such as cash savings, stocks and bonds. The goal is to protect it, make it grow and keep some available when needed. This approach, called diversification, helps them stay financially secure, even when the market is unpredictable.

High-Yield Savings and Money Market Accounts

Millionaires use high-yield savings and money market accounts to keep cash available for emergencies or short-term expenses. These accounts generally offer better interest rates than standard savings accounts.

Some high-net-worth individuals use private banking services at institutions, such as Chase Private Client, Citigold® Private Client and Wells Fargo’s Private Bank. These accounts often come with extra perks, like higher savings rates, fee waivers and personal financial advisors.

Stocks and Bonds

Many millionaires and billionaires build their wealth by investing in stocks — either in the market or through companies they’ve started or worked for. Stocks give you a share of a company and the chance for growth, while bonds act as loans to companies or governments, paying you regular interest over time.

Stocks allow the wealthy to grow their money, but they also know that investing in just a few companies is risky. That’s why they diversify by spreading their investments across different industries and asset types.

Dividend Stocks

Dividend-paying stocks are a common way for rich people to generate cash flow for monthly expenses. These stocks send shareholders a check at regular intervals, such as every quarter, that represents some of the profit the company has generated in the prior time period.

Investors who have enough money can generate a stream of income from dividends that allows them to live well without even touching the money they have invested in these companies.

Mutual Funds and ETFs

Mutual funds and ETFs allow wealthy investors to diversify their stock holdings. Instead of investing in individual stocks, they invest in a basket of securities, reducing risk and exposure to market volatility.

Index Funds

Wealthy investors use index funds to preserve capital because they offer diversification, low costs and consistent returns. Their predictable performance and help in developing investment discipline also make them a stable choice for maintaining long-term wealth.

Real Estate Investments

Investing in real estate has long been popular among the very wealthy. Buying property that can be rented to individuals or leased to businesses is a good way to bring in income.

Property values typically increase over time. This may give the investor a passive stream of income to live on as their portfolio increases in value at the same time.

Many millionaires own a mix of national and international properties, such as the following:

• Rental properties: Homes including vacation rentals and apartments that generate rental income.

• Commercial real estate: Office buildings, shopping centers and warehouses.

Private Equity and Business Investments

Private equity firms collect money from investors and pool the money together in what’s called a private equity fund. The firm uses the fund to make investments on behalf of the investors. Typical investments are taking a controlling interest in a business or company to increase its value or investing in quickly growing investments or startups. 

Millionaires and billionaires also can provide capital to fledgling companies on their own, which is called venture capital. In exchange, they will receive an equity stake in the company, so they own a percentage of the business.

More often than not, single venture capital investments fail to yield much more than the initial investment. Most wealthy investors will spread their investments across many different companies, in a portfolio approach, to see the biggest gains. 

Offshore and International Banking

Millionaires often utilize offshore banking, in locations such as the British Virgin Islands and the Cayman Islands. These come with access tax benefits, flexible corporate laws and seasoned financial service professionals.

Privacy is an important consideration when setting up an offshore trust. Different jurisdictions have their own rules about who can access or modify a trust. Strong privacy protections help millionaires keep their assets safe and enable them to achieve their goals.

Alternative Investments

Rich people often invest in collectibles like artwork, rare coins, antique cars, wine, watches, and other tangible items that bring the collector pleasure and increase their wealth.

Other alternative investments include: 

• Precious metals: People buy gold to protect the wealth they’ve already built, and it has a long history of holding its value. Silver is more unpredictable. While it has the potential for higher gains than gold, it also comes with a greater risk of losses.

• Cryptocurrency: Some millionaires invest in Bitcoin, Ethereum and other digital assets, like tokenized money or assets and indirect funds, as a way to diversify their portfolios.

How Millionaires Keep Their Money Safe

Understanding where millionaires keep their money is just one piece of the puzzle. The real key is how they protect and preserve their wealth over time. Millionaires don’t just focus on making money — they also take steps to ensure it stays secure and continues to grow.

Working With Financial Advisors

Financial advisors know all things taxes, estate planning and investing. As such, they can help their millionaire clients make wise financial decisions that fit their goals and risk tolerance.

They also help with things like budgeting, planning for the future and managing risks. Additionally, because tax laws are complicated and always changing, a financial advisor can help millionaires pay as little as possible and keep more of what they earn.

Avoiding Common Financial Pitfalls

To keep their money safe, wealthy individuals follow smart financial habits like the following:

• Plan ahead: Millionaires don’t leave anything to chance. They keep emergency cash on hand, get the right insurance and set up estate plans so their money goes where they want. Some also use offshore trusts to protect their assets from lawsuits and other threats.

• Diversify: Millionaires also avoid keeping all their money in one place. They invest in stocks, bonds, real estate and businesses as a means of diversifying and minimizing risk. Some even invest in other countries in case of economic or regulatory issues.

• Remain flexible: Laws and markets change, so millionaires are ready to adjust their strategies as needed. They work with financial and legal experts to ensure their strategies are in line with the market and current regulations. They also continuously learn about financial trends and investment options so they can make the best decisions for their wealth.

  
  

FAQ

Here are the answers to some commonly asked questions about where millionaires keep their money.

• Do millionaires keep their money in banks?

  • Yes, but not in regular checking or savings accounts. They often use private banking services for better perks and returns.

• How do the wealthy avoid losing money during market downturns?

  • They avoid impulsive moves, stay in touch with their financial advisor and rebalance and diversify their portfolios.

• Why do some millionaires invest in offshore accounts?

  • Offshore accounts offer tax benefits and security and also allow millionaires to manage their money while abroad.

• What percentage of a millionaire's wealth is in cash?

  • According to HSBC's Affluent Investor Snapshot for 2024, globally affluent investors keep 32% of their portfolios in cash.

• Can the average person use the same strategies millionaires do?

  • Yes. Even if you don't have millions to invest, you can still do things like participate in financial planning, seek out passive income opportunities and invest in diversified portfolios.

Source: Karen Doyle