How To Stay Rich: 8 Ways To Preserve Your Wealth

The ultra-wealthy have a knack for not just getting rich but also staying rich. Many wealthy people start out with a lot more money than the average person, but growing and protecting their money over time can be a challenge. To do this, they often make use of a number of wealth preservation strategies.

You don’t have to already be rich to benefit from these strategies, though. Anyone looking to boost their net worth and make their money last can apply these practices to their own financial situation.

How to stay rich: 8 ways to preserve your wealth

Wealth preservation isn’t just about saving money. It’s about making thoughtful, long-term decisions that help secure your finances for today and tomorrow.

Here are eight ways the rich stay rich — and how you can apply their wealth-building playbook to your own life.

1. Create a financial plan

One of the foundational steps to preserving wealth is to develop a comprehensive financial plan. This financial road map should include your long-term goals and overall strategy for managing income, expenses, investments, debt and taxes.

Wealthy people regularly review and update their financial plans, especially after major life events, like a marriage or the birth of a child, to keep their finances on track.

What you can do

You can create a simple financial plan by following a few basic steps:

• List out your goals: Start by identifying your financial goals, whether that’s saving up to buy a home or investing for retirement. Your plan should then align with those goals and their timelines.
• Create a budget to reach your goals: Construct a detailed monthly budget that outlines your income and expenses. By understanding where your money goes, you can make conscious spending choices, save more and accelerate your progress toward your goals. You can refer to Bankrate’s guide on how to create a monthly household budget to help you get started.
• Build an emergency fund: Allocate a specific amount within your budget to build an emergency fund if you don’t have one already. Most financial experts recommend saving three to six months’ worth of living expenses.
• Invest for the future: Explore different types of investment accounts, such as retirement plans, 529 accounts and taxable brokerage accounts. Earmark a percentage of your take-home pay to investments so that your money grows over time.
• Revise your plan: As your life evolves, so should your financial plan. Be prepared to regularly review it and make adjustments as needed.

For more advanced planning, consider speaking with a financial advisor, who can help tailor your plan to your specific needs.

2. Diversify your investments

We’ve heard it before: Don’t put all your eggs in one basket. But for the wealthy, diversification is much more than a cliché. They understand that investing across different asset classes — stocks, bonds, real estate and even alternative investments, like gold and collectibles — helps lower risk and opens up more opportunities for growth.

What you can do

To easily diversify your investments, consider index funds. By investing in exchange-traded funds (ETFs) or mutual funds that track major market indexes like the S&P 500, you can gain exposure to hundreds of stocks with a single purchase.

Another simple way to diversify your portfolio, especially your retirement portfolio, is with target-date funds. These funds automatically adjust your asset allocation based on your projected retirement year. As that date nears, the fund shifts from riskier stocks to safer bonds and cash, taking the guesswork out of asset allocation and rebalancing your portfolio.

If you prefer a more hands-on investment strategy, thematic ETFs can be used to target specific industries or sectors, such as energy or artificial intelligence. While these funds may carry higher fees than broad-market index funds, they offer a convenient way to strategically allocate your investments.

Once you’ve built a solid foundation, you can research other asset types, like real estate. You can buy rental properties or invest in real estate investment trusts (REITs) if direct property ownership feels out of reach.

3. Maintain a healthy cash reserve

The rich understand the importance of liquidity, or easy access to your money. A healthy cash reserve acts as a safety net for emergencies, allowing you to navigate rough patches without having to sell off investments or take on debt.

This reserve is typically kept in an easily accessible, low-risk account like a high-yield savings account or a money market fund.

What you can do

For most people, a good rule of thumb is to keep at least three to six months’ worth of expenses in a cash emergency fund. For people who own property, have dependents or are more financially conservative, a cash reserve may cover a year’s worth of expenses or more.

You can make saving money easier by automating regular transfers from your checking account to your emergency fund. Mobile banking apps usually make it easy to set up these deposits.

You can also explore savings apps that automatically transfer a percentage of your paycheck into a designated savings account each week or month. This hands-off approach can help make saving feel effortless.

4. Minimize taxes

The rich get creative with their taxes. They know that keeping what they’ve earned is just as important as earning it.

Wealthy individuals use different strategies to reduce their tax burden, including investing in tax-advantaged accounts (like retirement accounts), charitable giving, taking real estate deductions and tax-loss harvesting.

What you can do

Tax-advantaged retirement accounts, like individual retirement accounts (IRAs) and 401(k)s, are a great place to start. Contributions to these accounts help reduce your taxable income and allow for tax-deferred growth. Roth IRAs and Roth 401(k)s let you take tax-free withdrawals in retirement, though you won’t get an upfront tax break on your contributions.

Another common tax-saving strategy, known as tax-loss harvesting, helps offset capital gains by strategically selling assets at a loss. A financial advisor can help you explore other ways to avoid paying capital gains tax when you sell investments.

5. Create a comprehensive estate plan

Estate planning isn’t only for billionaires. It’s a powerful tool that anyone can use to protect their assets and ensure their wishes are carried out after they’re gone.

While the wealthy may have more complex financial situations, the principles of effective estate planning apply to everyone, regardless of your net worth.

What you can do

No matter the size of your estate, creating a will and assigning beneficiaries to your financial accounts are two simple, low-cost steps you can take to help preserve your legacy.

Wills are relatively affordable to set up, and there are plenty of online services that can help you with the process. By creating a simple will, you can save your loved ones time, money and stress.

For some people, trusts are another popular estate planning tool because they allow assets to bypass probate, keep financial matters private and potentially reduce taxes. However, trusts are more complicated and expensive to establish since they require the expertise of an estate planning attorney.

Remember, an estate plan isn’t a one-and-done document. It needs to be reviewed periodically and updated as your financial situation or family structure changes.

6. Use insurance to manage risk

Wealthy people understand that certain risks, while unlikely, can devastate their finances. That’s why they use insurance to transfer that risk and protect their assets.

Aside from standard insurance policies like health, home and auto, wealthy individuals often purchase life insurance policies to provide for their family after they pass away. They may purchase whole life insurance, which never expires so long as premiums are paid, with high death benefit amounts of $500,000 or more.

High-net-worth individuals may also purchase insurance designed to protect their businesses. For example, “key person” insurance is often used to safeguard a business in case a key executive dies unexpectedly.

What you can do

There are many types of life insurance out there, but for the average person, a simple term life policy suffices. It can help replace your income if you pass away during your prime working years, ensuring your family is taken care of.

Most term life policies last 20 or 30 years, and if you’re under 40 and in relatively good health, the monthly premiums can be inexpensive while still providing $100,000 or more in death benefits to your family.

Another inexpensive way to increase insurance coverage is by taking advantage of your workplace benefits. Many employers offer supplemental policies, such as disability insurance and critical illness insurance, that cost just a few dollars each paycheck while providing income if you’re unable to work for a period of time.

7. Partner with financial professionals

While it’s tempting to go it alone, wealthy people recognize the value of expert advice. They regularly work with a team of professionals — such as financial advisors, accountants, estate attorneys and insurance experts — to make informed decisions that align with their goals.

These experts help people avoid costly mistakes, manage their investments and adjust financial plans as needed. For example, tax laws are constantly evolving, so an accountant can help you navigate these changes to save as much money as possible.

Need an advisor?

Need expert guidance when it comes to managing your investments or planning for retirement?

Bankrate’s AdvisorMatch can connect you to a CFP® professional to help you achieve your financial goals.

What you can do

Even if you’re managing your own finances, an advisor can help provide valuable guidance on budgeting, investing and retirement planning. Meeting with an advisor annually to check on your progress or ask specific questions can add value and clarity to your financial journey.

8. Think generationally and plan accordingly

Generational wealth planning is key to building a financial legacy. One way rich people pass along wealth is through a family trust, which gives them the ability to designate how assets are used by future generations.

Some families even create “family offices,” which are firms that manage all aspects of a family’s wealth, from investment decisions to tax planning and philanthropy.

What you can do

While a family office is out of reach for most people, you can still pass on financial knowledge and values to your children. Teaching basic financial literacy and sharing your beliefs about money with your kids can create a solid foundation for them to carry forward.

There are many ways to do this, including involving children in family financial decisions like grocery shopping or paying bills. This provides hands-on experience while fostering a sense of responsibility.

Bottom line

Staying rich can be more challenging than getting rich — especially if you don’t have the right financial habits and mindset in place. Thankfully, strategies used by the wealthy are accessible to almost anyone who wants to protect their money and watch it grow. 

By adopting even a few of these habits, you’re not just setting yourself up to become rich — you’re building a foundation of wealth that can last generations.