7 Ways Rich People Make Money Work for Them (Other Than Investing)

09/05/2024

heres-why-your-salary-alone-will-never-make-you-super-wealthy.jpg

People often assume that rich people make their money primarily from investing in the stock market. However, wealthy folks have many other ways to make their money work for them.

Explore: 16 Tips To Live Well on a Low Salary, According to Dave Ramsey

Find Out: Owe Money to the IRS? Most People Don’t Realize They Should Do This One Thing

“Alongside investing, which still remains the mainstay of wealth-generation, there are many other (more creative) ways that the rich use to make their money grow,” said Kevin Huffman, owner of Kriminil Trading. Here are several of the top ways they do this.

Leveraging Their Business

“Many rich people use at least part of their fortune to create a business,” said Huffman. “If the business takes off, it can create a steady income stream, grow in value and then be sold for a big gain.”

Intellectual Property

Ownership of copyrights, patents and trademarks can be a profitable venture, explained Huffman.

“The ultra-wealthy can even invest in creating or owning intellectual property that provides ongoing royalties or licensing fees,” said Huffman. “A musician, for example, can monetize her music catalog as a source of revenue via streaming services.”

According to Rhett Stubbendeck, CEO and founder of Leverage Planning, creating intellectual property is not just about investing money, but also ideas.

“For instance, one of our clients developed a unique financial planning tool, secured a patent and now enjoys steady royalties,” said Stubbendeck. “It’s a fantastic way to build both income and reputation.”

Trending Now: How To Make Passive Income Just by Moving Money in These Ways

Paying for Time-Saving Services

High-net-worth individuals typically have a packed and demanding schedule. Each minute spent on mundane tasks like cleaning, cooking or running errands is a minute that could be spent on more valuable pursuits, like growing their business or spending quality time with loved ones.

For this reason, many wealthy individuals choose to invest in time-saving services that allow them to focus on what matters most. This could include hiring a personal chef to prepare healthy meals, a housekeeper to keep their home in pristine condition, or a personal assistant to manage their daily tasks and errands.

While these services may come with a significant upfront cost, the long-term returns can be substantial. By freeing up their time and mental energy, the wealthy can pursue higher-value activities that generate greater income and build lasting wealth.

Private Lending

According to Stubbendeck, private lending is another strategy wealthy people employ.

“It involves providing loans secured against real assets, offering higher returns than many conventional options,” said Stubbendeck. “We’ve seen annual returns ranging from 8% to 12%. It’s a powerful way to diversify and boost your investment portfolio.”

Skill Development and Personal Education

Another key strategy often employed by the wealthy, according to David Blain, CEO and founder of BlueSky Wealth Advisors, is the systematic investment in their skill development and personal education.

“Unlike direct financial investments, investing in personal and professional growth can yield dividends in the form of improved earnings, potential and innovative business ideas,” said Blain.

Whether it’s through advanced courses, exclusive workshops or strategic networking events, he says continuous learning allows individuals to stay ahead in their fields and leverage new opportunities that aren’t accessible through traditional market investments.

Building a Strong Network

One of the most valuable ways the wealthy make their money work for them is by building a strong network of influential connections. By cultivating relationships with other successful individuals, they gain access to valuable opportunities, insights, and resources that can help them grow their wealth exponentially.

This could include joining exclusive business or social clubs, attending high-profile events and conferences or simply making a point to connect with and learn from other successful entrepreneurs and investors.

Strategic Philanthropy

Lastly, Blain says many affluent individuals practice strategic philanthropy.

“By creating or donating to foundations, they manage to not only fulfill philanthropic desires but also achieve significant tax efficiencies,” said Blain.

“Through my tenure at [my company], guiding clients in setting up charitable trusts or foundations has proven to be a powerful method to manage larger estates, ensuring long-term wealth preservation and societal impact,” he added. “This approach not only aids in tax planning but also in solidifying a family’s legacy and influence.”