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Erin from Broke Millennial decodes how people stay crazy rich!

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How do the wealthy stay that way? They don’t invest like the rest
https://www.theglobeandmail.com/investing/globe-wealth/article-how-do-the-wealthy-stay-that-w ay-they-dont-invest-like-the-rest/

Why a lot of very expensive art is disappearing into storage:
https://www.npr.org/templates/transcript/transcript.php?storyId=584548472

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Hi, I'm Erin from Broke Millennial for the Financial Diet.

Welcome to the Three Minute Guide brought to you by Skillshare. When i was doing research for my second book, Broke Millennial Takes On Investing: A Beginner's Guide to Leveling.

Up Your Money, I decided to dedicate an entire chapter to ways in which wealthy people actually amass and then protect their money. I asked every expert I interviewed for the book; what is it that wealthy people do differently or how do wealthy people protect their money? You've probably heard some of the cliche behaviors of rich people, things like they wake up early, they never watch TV, they read a book every day, they always meditate, they know how to build a strong team.

Surprisingly, none of those cliches where answers the experts told me. Some of the responses I got were tried and true examples of how to build wealth like starting early, being consistent, and diversifying your investments. That is the playbook for how average Joe's like you and me can start to build wealth, but.

I wanted to know what are people doing who have let's say ten million dollars. How do they behave differently? Be warned that some of these examples could really rile you up because people take advantage of some crazy loopholes.

Number one: diversify in really unique ways in order to take advantage of tax loopholes. One woman I interviewed for the book used to work with high net worth individuals who had at least 25 million dollars so she witnessed all kinds of crazy ways that rich people would protect their wealth. One way was buying art and not just any art, very expensive art.

They weren't just buying this art to diversify their investment portfolio, instead wealthy people would buy this art and move it either to different countries or into storage known as free ports. These free ports are used as a tax loophole and they actually exist all over the world. Even if some of the free ports are actually on U.

S. soil, the art hasn't technically gone through U. S. customs yet and therefore doesn't have to be declared on the person's taxes. This way of delaying taxation is actually chronicled in a really interesting episode of the podcast Planet Money.

There's a link in the description of this video. In that episode, a reporter gives a very specific example of how this tax loophole works. Say her client bought a work of art for a million dollars.

If that client buys art in New York at Sotheby's, he has to pay New York sales tax at eight point eight seven five percent. That's eighty eight thousand seven hundred and five dollars. But maybe he sends that work of art straight to a Freeport maybe in Geneva or Singapore.

He doesn't have to pay that tax. Number two: access to different networking and investment opportunities. Not surprisingly, achieving a certain level of wealth unlocks certain opportunities for people.

Many years ago, I first heard about the Tiger 21 Club in a book called The Thin Green

Line: The Money Secrets of the Super Wealthy. In order to join, members have to have a ten million dollar net worth. It wasn't so much a secret society because they openly allow reporters in and they always allow for new membership without any of the cult-like rituals. Anyway, an article in The Globe and Mail pointed out "high net worth investors who are entrepreneurial often invests not only money but also their time taking board seats in startups where their experience can provide guidance to management, protect their investment, and contribute to the return they hope to achieve.

The Tiger 21 Club was even noted in that particular article as a way that these kind of networking opportunities are formalized for people. Number three: focus on emerging markets or industries. Having a lot of money enables you to take significantly more risk in your investments than the average person which is why some of the ultra-wealthy choose to focus their time and financial efforts on emerging markets and industries.

Because these provide ways for them to rapidly grow their wealth, if done correctly. We see examples of this with moguls like Jeff Bezos and Bill Gates who conquered the tech sector early or venture capitalists like Chris Sacca who got into Twitter as an early investor. Sometimes it's not even about a sector of our economy but actually an entire country's economic capabilities.

Even pop culture currently explores this premise and the franchise Crazy Rich Asians and sorry about any spoilers but book 2 in particular really focuses on all the wealth that's been built in mainland China in just the last two to three decades. If you get annoyed with some of these strategies I totally understand. However, I encourage you to reframe any potential anger into opportunities because now you know the playbook and it's important to know the rules of the game even if you aren't playing quite the same game yet.

Speaking of learning the game, investing is a key way that most wealthy people get there and stay there. You can start to learn the basics with Skillshare which provides an easy and affordable way to expand your talents. Every week we're featuring a different Skillshare class we think you guys will love.

This week's class is Investing 101: How the Stock Market Works hosted by Jordan K. founder of the YouTube channel Business Casual. This class will help teach you investing basics in 20 minutes to help you begin to understand how to grow personal wealth. As always though, Skillshare offers a huge range of high-quality classes on must know topics from writing to fitness to business.

And it's all about what you want to learn at an affordable annual subscription of less than $10 a month. And since Skillshare is sponsoring this video, the first 500 people to use the promo link in the description will get their first two months risk free to try it out. Click the link in the description to check out this week's feature class or any of the other classes Skillshare has to offer.

Have a money question you want to learn more about? Leave your topic idea in the comments section below. I'm Erin from Broke Millennial for the Financial Diet and don't forget to be here next Thursday for a new 3-minute guide.