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Some people are born into wealth.
Others work hard to build it on their own.
Regardless of how millionaires earn their fortune, they must make careful and calculated moves toensure their wealth grows.
The problem is, they may not exactly advertise all the ways in which they generate even more wealth.
Often they use these properties to generate rental income.
Say a wealthy investor purchases an apartment building for $5 million.
Over time, the property appreciates in value, and the investor benefits from rental income, Rappina said.
They also use depreciation to reduce their taxable income each year.
Later, when the propertys value increases to $8 million, the investor decides to sell.
But heres where things get a little complex.
Example: An investor allocates $1 million into an oil drilling project.
Turns out, striking oil is striking tax savings gold.
VC strategies entail investing in young companies that are not yet profitable, but have strong potential to be.
Example: A wealthy individual invests $500,000 in apromising tech startupthrough a venture capital fund, Rappina said.
Holding on to this investment formore than one yearis critical.
After that, the profit is taxed as a long-term capital gain at a lower rate than ordinary income.
Its like planting a money tree.
Meanwhile, the stocks remain in their portfolio, continuing to appreciate in value and potentially generating dividends.
Why sell the golden goose when you might just get a loan and let it keep laying eggs?
They Invest in Municipal Bonds
Another way the wealthy get even richer?
They invest in municipal bonds.
People in the finance industry call them munis for short.
Securities and Exchange Commission.
Savvy investors may also receive a tax benefit via municipal bonds.
Its like Uncle Sam patting you on the back for helping your city.
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