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How do Young Millionaires Manage their Fortunes? | ASHARQ AL-AWSAT English Archive 2005 -2017
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Dissipating Fortunes

Washington-Unfortunately, some people are lucky enough to be rich from a young age. Capgemini consulting corporation issued a report showing the interesting strategies used by youth millionaires in managing their fortunes.

Millionaires under forty are often more conservative than their older counterparts. They tend to keep their money, and avoid investing it in alternative options rather than stocks.

The results of this report along with other studies on how millionaires under forty manage their fortune may provide many learned lessons for those who lack a fortune but crave to form one. Below, you will find some of money-management strategies implemented by many youth millionaires.

According to the report, millionaires under forty have a lot of money and keep the third of their financial assets as cash money, including their deposits in banks like current accounts.

When asked about their adoption for the cash-money option, 17% of youth investors said that they chose it to benefit from any emerging sound investment opportunities, while 31% of them said they prefer cash to respond to requirements of the luxurious lifestyle they desire like vacations and fancy food…

On another hand, this generation feels more concerned from debts and billing systems they face. Therefore, 28% of the survey’s participants said that they keep cash money to protect themselves from the unexpected variations in the market.

But, according to Greg Popera, consultant of private fortunes in Merrill Lynch Wealth Management Corporation, cash money deposits in banks are costly for their owners who refuse investments, and may cause them to lose big revenues with time.

He added that concerning their investments, young millionaires don’t count on one path, and that 30% of their assets are managed by fortune managers who help them on building portfolios of shares, bonds, and other kinds of traditional investments. Yet, 40% of these investment portfolios are divided with other less traditional investments like real estates, commercial activities, and other alternatives.

According to financial consultants, this category of alternatives can include investments in gold, hedge funds, and other options. Investors can also find new opportunities, which are independent from shares and bonds like investing in real estates, or buying shares in business companies, or even by establishing small businesses to duplicate their fortune and gain massive revenues.

Yet, when comparing them to deposits in banks, the risk imposed by the mentioned projects, make them an option for only 13% of young millionaires.

The wealthy young men often prefer to consult internet, friends, and family asking for advice on how to manage their fortunes and on hiring a professional financial consultant.

Teeg Fakta, senior official in global capital markets in Capgemini says that experts are increasingly learning that the new generation of young millionaires doesn’t prefer the traditional management of fortunes, and that it prefers to control its own investment through internet’s electronic services.

The report added that the young wealthy people seek investments that will promote their financial portfolios, and make sure that their funds serve social causes they are interested in, like climate change, while they demand to exclude industries they refuse to support like alcohol, tobacco, or weapons.

Richard Del Horn, vice president of fortunes’ management in UBS Corporation, sees that these decisions are satisfying, yet investors should ensure that their efforts in excluding some industries will not push them to excessively investing in one sector.