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Commitment to Our Readers<\/p>\n
GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines<\/a> and our products and services review methodology<\/a>.<\/p>\n 20 Years Trusted by The wealthy<\/a> quietly use under-the-radar strategies to protect and grow their assets, especially during times of inflation, market volatility and economic uncertainty.<\/p>\n These tactics go beyond traditional investing and focus on tax efficiency, asset protection and long-term growth.\u00a0From sophisticated trust structures to lifestyle-aligned investments, here are five ways millionaires are quietly building and sustaining wealth<\/a>.<\/p>\n Lifestyle-Aligned Investing\u00a0<\/p>\n A growing number of wealthy investors<\/a> are putting money into assets that align with their values, interests and lifestyles.\u00a0<\/p>\n \u201cThink: boutique resorts, co-investments in passion projects (like sports teams or high-end retreats) and farmland with regenerative ag upside,\u201d said Chad Willardson, wealth manager and founder of Pacific Capital<\/a>. \u201cThese aren\u2019t just \u2018alts.\u2019 They\u2019re strategic plays that hedge inflation, offer tangible returns and align with the life they actually want to live.\u201d<\/p>\n<\/p>\n Cash Value Life Insurance<\/p>\n Cash value life insurance (CVLI) has become a popular tool for high-income individuals<\/a> seeking to grow their wealth in a tax-efficient manner.\u00a0<\/p>\n It offers tax-deferred growth, tax-free access through policy loans and a tax-free death benefit, helping wealthy clients protect their legacy while reducing exposure to future capital gains and income taxes.<\/p>\n \u201cThe wealthy aren\u2019t chasing returns; they\u2019re chasing control,\u201d said Jim DesRocher, financial advisor and founder at TrueView Financial<\/a>. \u201cIn this environment, strategies that offer tax flexibility and predictability are more valuable than ever.\u201d<\/p>\n The Swap Power Trust Strategy\u00a0<\/p>\n One powerful but under-the-radar strategy wealthy individuals could use to protect and grow their wealth<\/a> is setting up an irrevocable trust paired with a \u201cswap power.\u201d\u00a0<\/p>\n \u201cBy gifting assets into the trust now, all of the future appreciation on those assets happens outside of trustor\u2019s taxable estate, which is a straightforward way to shelter significant growth from future estate taxes,\u201d said Jake Howell, an estate planning attorney with Howell Estate Planning<\/a>.<\/p>\n Wealthy individuals could use the swap power to trade cash or low-growth assets from their estate for valuable assets that have grown a lot inside the trust. In simple terms, they\u2019d swap something with little or no gain for something with big gains. This would allow the trust to grow over time without triggering estate taxes. Then, once those assets gained value, they could swap them back into their estate and replace them with new assets that\u2019d be expected to grow more in the future.<\/p>\n<\/p>\n \u201cIn essence the unrealized gain reenters the taxable estate, but when they die, those assets get a step-up in tax basis,\u201d Howell said.\u00a0<\/p>\n Focus on Tax-Efficient Investments<\/p>\n Zach Wainwright, founder and CEO of Twin Oak ETF Company<\/a> and an investment advisor who works with family offices and private wealth management firms that serve ultra-wealthy families, said that one of the biggest hurdles to building long-term wealth is realizing taxable gains.<\/p>\n \u201cWe see family offices staying invested through volatile times because taking a +50% tax hit on an investment is a far tougher pill to swallow than staying invested for the long-term through uncertain times,\u201d Wainwright said.\u00a0<\/p>\n Increasingly, families are focusing on tax-efficient investments, such as exchange-traded funds (ETFs)<\/a>, over private funds, prioritizing long-term strategies, like buy and hold, to compound wealth over time.<\/p>\n \u201cAt the margin we see families pivoting towards liquid, risk reducing investment vehicles, like ETFs relative to private funds, but it takes time to rebalance,\u201d Wainwright said. \u201cIf families have cash now, they are spending more time evaluating ETFs and tax aware solutions to start, rather than getting caught in legacy alternative allocations they would have chosen historically. It is not sexy, but buying and holding for the long term is how families compound wealth.\u201d<\/p>\n Private Investments With Purpose<\/p>\n Private investments and real assets are attracting increasing attention as wealthy investors seek ways to diversify beyond stocks and bonds<\/a>.<\/p>\n![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-20.svg?webp=1&quality=75\"){kind=icon}
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