Connecticut’s got its share of residents in the high-net-worth ranks — generally defined as an individual with at least $1 million in cash and similar liquid assets — but once you’ve made it, there’s another challenge: keeping it and growing your wealth.
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Connecticut’s got its share of residents in the high-net-worth ranks — generally defined as an individual with at least $1 million in cash and similar liquid assets — but once you’ve made it, there’s another challenge: keeping it and growing your wealth.
We spoke with some investment and tax experts about best practices and strategies to increase a nest egg, while legally shielding more of it from the tax collector.
Taken individually, events like a significant change in administration, a pandemic and the resulting body blows to the economy would be enough to challenge just about anyone. But when they strike simultaneously — and when a new U.S. president and most of Congress also call for a series of tax increases on wealthy individuals and families — you’ve got a perfect storm that drives people to reexamine their portfolios, estate planning and other issues.
Financial planners and CPAs have some advice. To begin with, we asked some professionals for three pieces of investing advice during topsy-turvy times where — at least in the U.S. — fears of a possible inflationary spike have replaced concerns of a deflationary spiral.
Here are their words of wisdom:
Kevin C. Leahy, President and CEO, Connecticut Wealth Management in Farmington
Understand the return required from your portfolio to meet your needs now and into the future by building a plan. You might be surprised to learn that you can take on less risk in the form of stock exposure and still meet your goals.
Set appropriate expectations for bond returns and examine a more dynamic approach to fixed income in this low interest rate environment.
Consider establishing a private equity allocation (investments in companies that are not listed on public exchanges) to further diversify portfolios if appropriate. Be sure you fully understand liquidity constraints and other risks with private market investments.
Justin Bernier, Founding Partner, Hartford-based All Source Investment Management
Work with advisers who know how to use private investments that can help you get off the stock market’s roller coaster ride.
Don’t rely on traditional bonds and CDs for income because the interest is unlikely to keep up with rising rates and inflation. Look to private credit and private real estate for higher income opportunities.
Avoiding large drawdowns is the key to long-term wealth creation, so don’t cut corners when it comes to your money. Be willing to pay advisers who have a real, defined risk management process; let the other ones go.
