Where do millionaires keep their money? – The Madison Chief’s Gazette


Where do millionaires keep their money? High net worth individuals invest money in different classes of financial and real assets, including stocks, mutual funds, retirement accounts, and real estate. Most of the 20.27 million millionaires in the United States did not inherit their money; only about 20% inherited their money. Over two-thirds of all millionaires are entrepreneurs. Here are some of the places the real rich keep their money.

Whether you are a millionaire or not, a financial advisor can help you take important steps to reach your goals.

Cash and cash equivalents

Many, and perhaps most, millionaires are frugal. If they spent their money, they wouldn’t have any to get rich. They spend on necessities and some luxuries, but they save and expect their whole family to do the same. Many millionaires keep a large portion of their money in cash or highly liquid cash equivalents. They set up an emergency account before they start investing. Millionaires cash in differently than the rest of us. All the bank accounts they have are managed by a private banker who probably also manages their wealth. There is no queue at the cashier window.

Studies indicate that millionaires can, on average, have up to 25% of their money in cash. This is to compensate for any decline in the market and to have cash available as insurance for their portfolio. Cash equivalents, financial instruments almost as liquid as cash. are popular investments for millionaires. Examples of cash equivalents are money market mutual funds, certificates of deposit, commercial paper and treasury bills.

Some millionaires keep their money in treasury bills which they continue to renew and reinvest. They liquidate them when they need money. Treasury bills are short-term notes issued by the US government to raise funds. Treasury bills are usually bought at a discount. When you sell them, the difference between the face value and the selling price is your profit. Warren Buffett, CEO of Berkshire Hathaway, has a portfolio full of money market accounts and treasury bills.

Millionaires also have zero balance accounts with private banks. They leave their money in cash and cash equivalents and they write checks on their zero balance account. At the end of the business day, the private bank, as the custodian of their various accounts, sells enough cash to settle that day. Millionaires don’t worry about FDIC insurance. Their money is held in their name and not in the name of the private custodian bank.

Other millionaires have safes filled with cash denominated in many different currencies. These vaults are located all over the world and each currency is held in a country where transactions are carried out using that currency.


Luxurious house

For over 200 years, investing in real estate has been the most popular investment for millionaires to keep their money. For all these years, real estate investments have been the primary vehicle for millionaires to build and maintain their wealth. The trend started with the purchase of a primary residence and then other residences, generally for tenants. After buying personal real estate, they started buying commercial real estate like office buildings, hotels, stadiums, bridges, etc.

Millionaires often have large real estate portfolios. Once they establish themselves as buyers in the real estate market, real estate agents start offering them deals and it is easy for them to get financing. Large investors have several million dollars tied up in real estate. Real estate is not an investment to count on for money, but it is a lucrative long term investment and a proven investment for millionaires as they love passive income and find real estate provides it. .

Equities and equity funds

Some millionaires favor simplicity. They invest in index funds and dividend paying stocks. They love the passive income from equity securities just as they love the passive rental income that real estate provides. They just don’t want to spend their time managing their investments.

Ultra-rich investors can have a controlling stake in one or more large companies. But, many millionaires hold a portfolio of a few equity securities. Many can own index funds because they generate decent returns and you don’t have to spend time managing them. They also have low management fees and excellent diversification. Millionaires also love dividend-paying stocks for the passive income they provide. Of course, they are also interested in capital appreciation, but for some it is less of a concern than generating current income.

Private Equity and Hedge Funds

Unless you are a multimillionaire, you cannot participate in a hedge fund or buy into a private equity fund. Public capital is well known since its shares are traded on the stock exchange. One of its advantages is its liquidity. You can easily liquidate your public stocks or stocks. Private equity funds, on the other hand, usually get their investments from large organizations like universities or pension funds. Private equity fund investors must be accredited investors with some equity, typically at least $ 250,000. Accredited investors can be individuals as well as organizations, but they are defined by regulation. In other areas, private equity funds don’t have to comply with as many regulations as private equity. Some ultra-rich, if they are accredited investors, invest in private equity.

Hedge funds are not the same as private equity. Hedge funds use mutual funds and pursue several strategies to generate disproportionate returns for their investors. Hedge funds invest in anything that fund managers believe will generate the highest possible short-term profits.


Commodities, like gold, silver, mineral rights or livestock, to name a few, are also storehouses of value for millionaires. But they do require storage and have a level of complexity that many millionaires just don’t want to handle.

Alternative investments

Wheel and cockpit on a beautiful wooden sailboat

Wheel and cockpit on a beautiful wooden sailboat

Some millionaires, as well as the ultra-rich, keep some of their money in other alternative investments such as tangible assets such as fine art, expensive musical instruments, or rare books. There are also millionaires and the ultra-rich who have invested in intellectual property rights such as the rights to songs or movies. These investments can be very lucrative.


It is estimated that there are around 100,000 cryptocurrency millionaires, with the majority holding Bitcoin. To try to make a fortune in cryptocurrency you need to be willing to take risks and many millionaires are risk averse. You can take a small portion of a millionaire’s wealth and invest in one of the different cryptocurrencies. Many people have become millionaires this way. Some have lost their money. Increasingly, cryptocurrency is being accepted as a legitimate investment that deserves a look when trying to accumulate wealth.

The bottom line

Millionaires have many different investment philosophies, so it’s hard to generalize about where they keep their money. However, all of the above are legitimate investments for millionaires. They want reduced risk, which is why many prefer diversified investment portfolios. Many of these investments can be combined in an attempt to increase wealth.

Tips for investing

  • Would you like to study the growth of your investments? Check out SmartAsset’s free investment calculator.

  • Do you have questions on how to start investing? It is wise to start by consulting a financial advisor. Finding a qualified financial advisor doesn’t have to be difficult. SmartAsset’s free tool connects you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is best for you. If you’re ready to find an advisor who can help you reach your financial goals, start now.

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