How to Handle Your Net-Worth Crossing Into 7 Figures

Korey Knepper |

Have you recently hit the millionaire milestone? Was it from a recent financial event, or from years of hard work, and investing wisely? It’s an exciting milestone, whether it is from long-term investing, a wealth transfer, or a sale of a business. But, with excitement comes doubt, you got there, now how do you stay there. How do you protect, manage, and grow your wealth? Let’s look at a couple of key elements, estate planning, investing now, and down the line.

Cue the disclosure: Keep in mind that this article is for informational purposes only and is not a replacement for real-life advice. Consult tax, legal, and accounting professionals before modifying your financial strategies as your income changes. This article was written to provide insights into a few related factors you may wish to consider.

Estate Planning

Your estate strategy might already be in place, however, after reaching new heights, this might be a good time to revisit that. Everyone knows the saying “More money More problems”, and that couldn’t be truer than with estate planning. Having a larger estate can create complex issues, specifically taxes. One area to look at would be a living trust, you can create a living trust and fund it with assets you choose to transfer in. The trustee (that’s you typically) has full power to manage these assets and how they are used. Trusts are complex documents with a wide range of uses, and you should consider working with a professional familiar with the rules and regulations.

Current Investments

Now that we have set up a baseline of a million dollars, it is important to protect that amount. In other words, don’t put it all on black, or the Chiefs to with the Super Bowl. Don’t be in a big rush to make sure the money is going to all different places either, take a deep breath and think about what the best decision for you and your family is. When it comes to building wealth, there is no reason why it must stop at a million, or even at seven figures. Investing based on your risk tolerance and time horizon should still be the goal. Now, maybe this is new money for you, and that could change your time horizon. For example, if you inherited two million dollars, and you weren’t expecting it, your retirement age might have gone from 67 to 57. If that is the case, it is a good time to reassess your investment strategy. Whether you choose to stay aggressive, or scale back into a more conservative portfolio, remaining diversified is key.

Future Investing

Now that the nest egg is getting larger, it’s important to understand how to protect and grow it, while being able to use it for income. There are a lot of different strategies out there, and it can be complex, but finding the strategy that best suits you typically isn’t that complex to you. It could be difficult to explain to others, but the best strategy is one that you understand. If you are within the ten years till retirement phase and have crossed that seven figure mark, it might make sense to lower the risk profile of your portfolio. This doesn’t mean moving it all to cash or bonds, however, it can mean moving a portion of your portfolio to those allocations. If you are still wanting to play the long game, stocks may still be the focal point of your portfolio, and that’s okay. By staying aggressive, we can see possibly add another zero to the net worth and estate. It is important to know the proper balance for you. Sitting down with an advisor can help, but before doing so, I would want to check off a couple of boxes. Are they a fiduciary, will they provide me with multiple options, and can they explain those options to me. If you don’t understand it, you shouldn’t do it.

As always thanks for reading!