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5 Mistakes High Net-Worth Individuals Avoid

Those who think that one can become a High Net Worth Individual (HNWI) easily are grossly ignorant. It is never too easy to earn money and to become an HNWI one needs to involve oneself in extensive smart financial planning. Ask any HWNI about their experiences and successes and they are quite likely to suggest that you must not ignore your mistakes. Every mistake is a lesson, and this adage keeps these individuals conscious of their actions.

If you are still reading the article, then I am quite confident that you want to explore ways to minimize mistakes and maximize results. Over here you will get an idea of what you must avoid to become or sustain as an HNWI.

Here are 5 of those mistakes to avoid.

  1. A single source of income
    The first flaw in your plan of action is reliance on just one source of income. Financial experts all over the world sing the same tune: do not put all your eggs in one basket. It is important to diversify your sources of income in case you want to earn millions and secure a comfortable life. Ask any HNWI you know and she will certainly ask you to invest in different areas as per your needs and requirement. The more sources you have the more opportunities you will get to enhance your income; the more opportunities you get the more secured your financial credentials will be.

  2. Hesitation to invest
    The younger population is showing a strong and steady inclination towards investment. But, the older generation has been quite skeptical of taking risks in the market. They often rely on low-yielding Fixed Deposits and government schemes that do not increase their worth significantly. Yes, with investments come risks, I admit, but calculated risks are what is expected from smart investors. If you hurry, then you will lose money in a blink of an eye. What you need is an efficient and intelligent advisor, patience, and acceptance that a market is a moody place with its own ups and downs, and the market yields more returns in the long run if you stay disciplined.

  3. No idea where your money is going
    You are not allowed to become complacent when you establish yourself as an HNWI. As I said earlier, it is never too easy to earn money. Once you have it, you must keep a watch on it. With the money growing in your bank account, you will also notice changes to your spending pattern. A financially savvy HNWI understands the relevance of tracking expenses and she takes note of every single penny that goes out. Make it a habit to track your spending habits weekly or monthly. If this is too much work for you, then download credible finance management applications to do the same for you. No matter what, however, you must always know where and how you are spending money.

  4. Not preparing for retirement
    There will come a time in your life when you would want to retire and spend your time in leisure. After all, you worked so hard for years to build a life for your own and your family and deserve a break after all your responsibilities have been discharged. But, for effective retirement planning, you need to work on your foresight. HNWIs understand that they cannot leave their retirement plans for later. They assess their current lifestyle, the kind of lifestyle they want post-retirement, current obligations, and current and potential future earnings. Then, they invest in retirement schemes offered by private and government organizations, deposit amounts in a high-yielding savings account, and whatnot. These investments are secured and extend tax benefits as well which only enhances net worth.

  5. Being gullible
    Listen up! I get it that you are smart, strategic, and visionary, but you are only human. And, humans make mistakes. When money starts collecting in our accounts and our lifestyle improves, we become reckless. This recklessness is, especially, exhibited towards people. We begin to trust people very easily. Somebody approaches us with a scheme that yields handsome interests and we sign up without due diligence. Or, you hire a financial advisor without consulting experts or doing your own research. It is your hard-earned money that you want to protect and you must only let the ablest of all take care of it on your behalf.

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Anna Papadopoulos
Anna Papadopoulos is a senior money, wealth, and asset management reporter at CEOWORLD magazine, covering consumer issues, investing and financial communities + author of the CEOWORLD magazine newsletter, writing about money with an enthusiasm unknown to mankind. You can follow CEOWORLD magazine on Twitter, Facebook, Instagram, or connect on LinkedIn for musings on money, wealth, asset management, millionaires, and billionaires. Email her at info@ceoworld.biz.