9 Money Secrets of the Ultra Wealthy

Facebook AI image of an ancient castle.

9 Money Secrets of the Ultra Wealthy
 
There are families who manage to keep wealth over centuries. Alnwick Castle, the 2nd largest inhabited castle in the U.K. behind Windsor Castle, has been home to the Percy Family for 700 years. (We know it fondly as Hogwarts in the Harry Potter movies.) Has the same family owned the biggest house in your hometown for centuries? Why is the Hearst Castle owned by the State of California?
 
It has been posited that 70% of us will lose the family wealth in the 2nd generation, while 90% is lost by the 3rd. (There have been data scientists who dispute this.) Whether it is poor stewardship, high taxes, shoddy legacy planning, or dilution, one thing is sure: the only way that the wealth stays in the family throughout the ages is through a carefully crafted plan that all of the family members understand and buy into. The U.K. and most European countries have higher tax rates than the U.S., so understanding how to limit taxes is a huge piece of the puzzle, particularly when most billionaires pay a much lower tax rate than working folks, and sometimes no taxes at all. Below are 9 money secrets of billionaires and royals, with a link at the end of this blog to an additional ten tips.  
 
Here are the tips we’ll cover in this blog.
 
Managed Plans Do What the Markets Do 
7 Companies are Taking Wall Street to New Highs
Peter Thiel has 5 Billion Dollars in a Roth IRA
Legacy Wealth Plans 100 Years in Advance
Paper Losses are Still Losses
Keep the Money in the Family
Partnership and Community
Be the Boss of Your Money
10 Additional Wealth Secrets
 
And here is additional information on each point.
 
Managed Plans Do What the Markets Do 
The majority of managed plans do with the markets do, as do most of our retirement plans. That means that 2023 should have been a great year in stocks for most of us (+26% in total return in the S&P500), while 2022 was a terrible year with -19.44% losses.
 

You might think that makes a strong case for Buy & Hold. However, the only way we made back 2022 stock losses was if we were invested in the Magnificent 7 companies. (Learn more in the tip below.) Also, 21st Century recessions sink steep, rapidly, and take years to recover, making Modern Portfolio Theory and regular rebalancing an important part of a protected wealth plan. This time-proven, 21st Century plan earned gains in the Dot Com and the Great Recession, and outperformed the bull markets in between.
 
In between October 2007 and March 2009, the Dow Jones Industrial Average lost 55% dropping to a low of 6537. It took years to recover those losses. Most investors spent the first part of the bull market crawling back to even, while many others were too shell-shocked to invest until stocks were hitting highs again.
 
The plunge was even worse in the Dot Com Recession. Between March 2000 and October 2002, the NASDAQ Composite Index lost -78% and took 15 years to come back. That means that $1 million dropped all the way to $220,000. If you had a plan in either recession that lost a significant amount, and you haven’t made any changes, now is a good time to consider receiving an unbiased 2nd opinion. Email [email protected] to learn more.
 
 
7 Companies are Taking Wall Street to New Highs
There are some similarities of the Dot Com Recession to today’s market. For one, equities are very expensive. As you can see in the chart below, the only time that stocks had a higher price was in the Dot Com Recession (when Dot Coms lost -78% of their value). (Prices are higher today than before the Great Depression.) As just one example, Nvidia (a popular AI company) has net income of $30 billion and a market value of $3.3 trillion (as of 10.10.2024).

Source: Robert Shiller, Ph.D., Nobel Prize winning economist, professor, Yale.

The second thing is that only a handful of companies are responsible for almost all of the gains. If you did not have a large growth fund in 2023, which includes the Magnificent 7 companies, you didn’t recover the losses of 2022. The S&P 500 return without the Magnificent 7 was only 9.99%.
 
This is why we diversify into 10 different slices in our sample nest egg pie chart. Large, mid, and small caps, value and growth, and four hot slices. We want that extra performance that the growth funds and hot industries provide. We also need an age-appropriate plan that is protected from principal losses (even paper losses). It’s key to know this by reviewing the information, not just by having blind faith in what we’re being told.
 
How do you learn our time-proven 21st Century strategy, or make sure that your financial partner is offering you an age-appropriate and diversified plan? You can read about it in The ABCs of Money 6th edition. You can learn and implement it in our Financial Freedom Retreat October 18-20, 2024, and our Bonds & What’s Safe masterclass Oct. 26, 2024, (online). You could also get an unbiased second opinion through my private coaching program. Email [email protected] to learn more.
 
Peter Thiel has 5 Billion in a Roth IRA
Rich people don’t put their money in jars. Tax strategies of the wealthy include knowing how to put their money to work without paying capital gains taxes. Many of us are not thinking (or aware) of all of the ways that we could protect our wealth from capital gains taxes, income taxes and losses (even paper losses) – sometimes even while receiving tax credits. Most of us should have a plethora of accounts building wealth for us while we sleep, including our:
 

• Employer-based retirement account (pre-tax, capital gains tax-free, but limited choices for investing),
• Personal tax-free retirement account (capital gains tax-free, often with many choices for investing, sometimes without income taxes upon distribution),
• Health savings account (can save thousands annually in health insurance costs and provide a tax credit that can be used even if we don’t itemize our tax return),
• Kids’ dependent IRA’s and college funds (building for their future without capital gains taxes), and,
• Perhaps even a family foundation, if we’re in a very high-income tax bracket.

 
Legacy Wealth Plans 100 Years in Advance
There are European families, such as the Percy Family and The Royal Family, who have kept their wealth, even in very highly taxed countries, for centuries. How did they do this? They think and plan 100 years in advance. They also keep the money in the family, know what they own, monetize their land, hold regular family wealth planning meetings, and begin the transfer of wealth when their kids are still teens. Everyone receives financial literacy training.
 
FYI, this is one of the reasons why I host the Restormel Royal Manor House Retreat every other year. When you live for a week in a manor house that has been there since the 1700s and visit the castle that has been there since the 1100s, wealth takes on a completely different perspective. The lessons that we teach at the retreats and master classes sink in viscerally, and our vision expands exponentially.
 
Paper Losses are Still Losses
The reason that most people don’t buy low is that they can’t. 20 million Americans (or more) were struggling to save homes and recover nest egg losses in the Great Recession. Few had any resources or stomach to invest in the recovery and purchase at bargain prices. Planning ahead and protecting our wealth affords us both of those necessary means – the financial and the emotional.
 
Paper losses are also an impediment to buying low. In order to free up the capital to make a purchase, we must lock in the loss. We might have to borrow at a higher interest rate because our net worth and FICO score plunges with “paper” losses. This is why we must always know what we own and why – so that we can protect our principal in an age-appropriate way.
 
As mentioned above, most managed plans do whatever the market does. In the Dot Com and the Great Recessions, both real estate and stocks dropped precipitously. Are we betting that stocks and real estate never go down? The bond market held up pretty well in both of those recessions. However, this time around credit and duration risk are more elevated, while interest rates are not predicted to fall nearly as low. (Time will tell; economic forecasts are always uncertain.) Most people lost -26% or more on their principle in long-term government bonds in 2022, and those losses weren’t made up in 2023. Credit and duration risk remain elevated. Learn how to earn a safe, steady yield in our Bonds & What’s Safe masterclass Oct. 26, 2024, (online).

​

FYI: We were encouraging investors to lean into real estate instead of bonds between 2009 and 2015 – a strategy that doubled in value for many, while avoiding the paper losses altogether! Wisdom, data and information are powerful.
 
Paper losses can become real losses. We can get into a liquidity crunch, and our FICO score drops. If the bond duration is a long period of time, the company or sovereign itself might have to restructure. The duration might be longer than our life span. We’ve seen a cycle of debt restructuring in the airline and auto manufacturing industries. In 2011, Greek bondholders took such a haircut that MF Global went bankrupt. The key is always to know what is in favor and what is risky before it happens. We’re supposed to protect our principal on the safe side, not reach for yield.
 
Many private clients ask, “Who is loaning money to these companies that are at the lowest level of investment grade and are so risky?” without realizing that we (Main Street investors) are the ones loaning the money, in our retirement plans, our insurance plans and even our managed wealth plans. Big banks make a lot of money selling fixed income products to Main Street investors. Fiduciaries sometimes buy them for clients without advance notice, particularly if they’ve been authorized to do so.
 
Keep the Money in the Family
I often mention that Prince William didn’t buy Kensington Palace, or that King Charles didn’t purchase Windsor Castle. Many Main Street folks laugh, and say, “Well I’m just not that rich.” However, the lesson I’m trying to underscore has less to do with being a billionaire, and more to do with adopting the strategies of the ultrawealthy, which are available to all of us. Imagine how financially advantageous it is for us to keep the money in the family and stop making landlords rich at our own expense – a key strategy employed by a great deal of very rich folks.
 
If we add up all the money that each one of our kids and our parents are spending every year on housing, particularly with today’s extremely high rents, that could be $100,000 or more annually. (3 family members spending $2500/month on housing = $30,000 each or $90,000 annually.) With that kind of dough, we could all live in a mansion so big we wouldn’t have to see each other without setting up an appointment.
 
You can learn more about housing and budgeting solutions in my recent blog and in my upcoming videoconference on Thursday, Oct. 17, 2024. Email [email protected] with VIDEOCON in the subject line to join us live. Watch it back (and subscribe so that you catch all of my free videoconferences) at https://youtube.com/nataliepace.
 
Partnership and Community
When the Twin Towers fell in Manhattan, first responders flew in from all over the world to support the recovery efforts. As we encounter one of the worst hurricanes ever seen in Florida with Hurricane Milton, it’s important for all of us to have empathy for those affected by natural disasters, and to offer support in the recovery and rescue efforts. Life is full of achievements and challenges, and both require partnerships and communities. No grand achievement is ever accomplished by oneself. In our darkest hour, it’s often someone else who carries the light and helps us to weather the storm.
 
I want to share with you other examples of great achievements. From 1987 to 2019, Costa Rica doubled its forest cover from 26% to over 52%, thanks to rigorous reforestation initiatives and incentives for landowners to plant trees. The country powers 98% with renewables and ensures that all citizens are eco-educated and incentivized to preserve biodiversity and live green.
 
Poundbury, Dorset, England was built according to the vision for Britain of King Charles III. It has attracted sustainability folks from around the U.K. to its community. Damers First School, under the leadership of former eco coordinator Edd Moore, became one of the best examples of a green school in the world. Damers has received awards from Jane Goodall‘s Roots & Shoots program, from the UK’s Eco Schools program, from Surfers Against Sewage, and so many other organizations who recognize the power of educating children on nature and the environment. The 5 to 9-year-olds at Damers First School:
 

• Have almost eliminated plastic,
• Most walk or ride a bike to and from school and for most local errands,
• Power their school with solar,
• Heat and cook with anaerobic digestion,
• Grow healthy, nutritious food in their own student gardens,
• Learn about science in their own nature area and chicken coop,
• Compost (which raises funds for the school), and so much more.

 
You can watch some of the great work being done by schools in the Kids episode of our Earth Gratitude 5-part docuseries.
 
Earth Gratitude is another example of partnership and community, with contributions from H.M. King Charles III (when he was The Prince of Wales), H.H. The Dalai Lama, Sia, Ed Begley Jr.,​XPRIZE, Wangari Maathai, Arianna Huffington, The Duchess of Northumberland,​Deepak Chopra, EARTHDAY.ORG, Ron Finley, the NRDC, Global Green, ​Lynne Twist, Green Our Planet, Life is Good, Master Sha, Leon Krier, Kiss the Ground, Nathalie Kelley, 4p1000.org, Alice Waters, The Edible Schoolyard Project, H.M. Queen Diambi, The Pachamama Alliance, WildlifeDirect and more. 
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Be the Boss of Your Money
A bond manager had to report daily to her billionaire boss. The vice chairman of an investment bank still has to politely turn down the sales requests of his banker to get into long-term Treasuries for the “income” (even though he’s the expert and she’s the salesman). As Joe Moglia, the former CEO and chairman of TD AMERITRADE is fond of saying, “No one cares more about your money than you do.”
 
In bull markets, our financial advisors will look like geniuses. In bear markets, we’ll think they are jerks. In truth, we should always be the boss of our money and know what we own and why. Gains are ours to keep, as are losses. The broker-salesman gets paid either way.
 
Now, with stocks and real estate still hitting new highs, is a great time to fix the roof while the sun is still shining – to protect our wealth before any economic storms arrive.
 
10 Additional Wealth Secrets
While some nouveau riche (particularly athletes and lottery winners) fly high and crash, others can completely transform the trajectory of generations to come. A focus on education has made Asian Americans the top U.S. household income earners. Learn 10 additional wealth secrets in my 2023 blog on Wealth Secrets.
 
Bottom Line 
People don’t get rich or stay rich by accident. Most of them employ the legal means and wealth secrets listed above -- which any of us can adopt to live a richer life. When we are struggling to survive it is hard to imagine that a complete money makeover could change everything. However, I can attest personally that adopting these wealth strategies leads to greater wealth, a much richer life, and the ability to enjoy the flow of money instead of feeling like it flies out the window all the time.
 
Is it possible to love paying your bills? Certainly not if you really don’t like the things that you spend money on. However, when you erase the board clean of what you believe life has to be, and dream of what you would like it to be, that is when we can move forward to make the necessary changes to build and sustain the life of our dreams. There are a lot of secrets, strategies, and tax advantages available to all of us. Contrary to popular beliefs, earning more isn’t the ticket out of the rat race. (Earned income is taxed at the highest rate!) It’s investing more and wasting less, combined with partnering up to keep the money flowing in our family and communities, and to stop making billionaires and entrenched, outdated corporations rich at our own expense.


​Join us at our online Oct. 18-20, 2024 Financial Freedom Retreat and our Bond/What's Safe Master Class Oct. 26, 2024. Learn how to:

* Invest in hot industries, such as Nvidia and artificial intelligence,
* Hedge against a weaker dollar,
* Invest and compound your gains,
* Green your retirement plan,
* Easy and efficacious nest egg strategies,
* Get hot and diversified (including in artificial intelligence and EVs),
* Evaluate stocks,
* Keep an age-appropriate amount safe, and,
* Know what's safe in a Debt World.

You'll even discover how to save thousands annually with smarter big-ticket choices. Yes, it's a complete money makeover. 
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Email [email protected] or call 310-430-2397 to learn more and register. Learn the 15+ things you'll master and read testimonials in the flyer on the home page at NataliePace.com. Register with friends and family to receive the best price. ​

"Ten minutes into the first day I was already much smarter about investing than I ever thought I would be in my life and I knew I was in exactly the right place at this retreat. I am amazed at how EASY and FUN it is to make my money work for me and those I love. I think this kind of information should be compulsory in schools. I wish I'd learned this sooner." CM

If you’d like an unbiased 2nd opinion on your current wealth plan, email [email protected] for pricing and information.

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Join us for our Online Oct. 18-20, 2024 Financial Freedom Retreat. Email [email protected] or call 310-430-2397 to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details.

Join us for our Restormel Royal Immersive Adventure Retreat. March 7-14, 2025. Email [email protected] to learn more. Click for testimonials, pricing, hours & details. There is very limited availability. Register now to ensure that you get the exact room you want. (There may not be an opportunity to register after Sept. 15, 2024.) This retreat includes an all-access pass to all of our online training for a full year for two, and three 50-minute private, prosperity coaching sessions. Much more affordable than you might think. Email [email protected] to learn more.

Natalie Pace, Lauren Anderson and Linda Bjork at a 21 Leaders Gala honoring Melanne Verveer and other leaders.

Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​

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Check out Natalie Pace's Substack podcast on Apple and Spotify.
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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.