Random Samplings of Millionaire Behavior

There is usually an abundance of wealth news floating around the web.  This post has a random sampling and summary of several news items published in the past couple of weeks which relate to wealth, affluence or millionaires.

I’ve included:  ideas on how to invest in this economy; statistics on millionaire investing trends; some intriguing information on the IRS’s voluntary offshore account disclosure program; and information about a helpful Vanguard newsletter.

CNN Money did a piece called “How to Invest in a Scary Economy“.

In it they have some analysis and several recommendations:

• Re-balance your portfolio to reduce exposure to equities – 10% mix of corporate bonds and cash. They suggest corporate bonds because businesses are further along in reducing debt and growing cash than governments are.
• If you want to keep equities, invest in stocks that do well in the later stages of an economic recovery – such as energy or industrial stocks. They list GE as well as Vanguard Energy ETF as potentials.
• Because the jobs outlook isn’t improving, they also suggest investing in companies that make products you need no matter what (like toothpaste).
• For your international allocation, keep emerging market portions to 25% or below.  They think there will be more risk in emerging markets.  If you don’t have 25% allocated to international yet, they have a few ideas on helping you get there.

Millionaire Corner, put out by the Spectrum Group did a survey in August 2011 to query wealthy investors on their stock market research. In “Wealthiest Investor’s Still Engaged in Stock Market Research” they reported on it.

• They found that 20% of the households with $500,000 or more in net worth had done research to see what their next moves in the market should be.
• 80% of investors with a net worth between 5 million and 4.9 million think that smart investing is a key to their success, as opposed to 66% of the mass affluent investor segment.
• All groups (millionaires, ultra rich and mass affluent) all indicated that being actively involved in investing their own money had lost it’s luster, however the 3 million to 4.9 million net worth group was more excited about it than the below 3 million net worth group.

The New York Times (“Voluntarily Disclose Your Offshore Accounts, or Else“) clues us in on rules and penalties for avoiding taxes on offshore accounts.

There has been a voluntary disclosure program sponsored by the IRS since 2009 (which expires Sept 9) . If you have an overseas account and have not reported taxes on it, the disclosure program allows you to tell the IRS about it. If you do so, you could face penalties up to 25% of the account value (the highest value of the account in the past 8 years!).

Such a deal! However if the IRS determines that you have willfully hidden accounts from tax collection, the penalty could be up to 50% EACH YEAR of the account value – and you could face criminal charges.

The NY Times authors think three groups of people could benefit from using the voluntary disclosure program (as opposed to hiring a lawyer and negotiating reduced penalties with the IRS):

1. People who inherited money in accounts overseas and kept it there
2. People who put money overseas in better times and need it now (wire transfers of large sums of money are now closely tracked so these folks can’t get their money without being caught).
3. People who willfully hid money to avoid taxes.

If you are a Vanguard account holder, you may receive their newsletter (“In the Vanguard” – subscription link, the newsletter is not online). In the Summer 2011 edition, they included a special estate planning section with a nice two page personal records inventory and a blurb on what the family should be doing right after death, in the first three months and in the following months.

The form has areas for you to list what you have and where you store it for things like:

• Personal papers (birth, marriage certificates, safe combinations, vechicle titels and the like)
• Home related documents such as where your keys are kept, mortage papers, appraisals titles and deeds and etc.
• Insurance and other benefits (Social security, employer benefits, etc)
• Estate planning documents (wills, trusts, funeral arrangements, contact list and etc)
• Investment information (banks, brokers, advisors, investment accounts, etc)
• Family and friends (children, siblings, clergy, neighbors, guardians, babysitters and etc)
• Insurance agents (life, health, auto, home)

Hope you have enjoyed my random samplings.  If you know of others, please tell me in a comment!