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The wealthy pay close attention to where they invest.
And if they dont, then they often dont stay wealthy for long.
Take a word of caution from those who have been playing and winning this game for a while.
Watch out for these investments that multimillionaires avoid.
Also here are three ways a multimillionaire maintains their financial status.
Despite the buzz about their high returns, the market is incredibly volatile and unpredictable.
Their value can swing dramatically based on market sentiment and speculative trading rather than any real, intrinsic value.
I prefer to invest in more stable, well-regulated markets that provide consistent returns and lower risk.
Speculating doesnt involve fundamentals it requires something to change if it is to earn a return.
Wealthy individuals tend to shy away from overly speculative investments, said Paul Chow, co-founder ofDesign Dynamics.
Their focus is on stability and long-term growth.
Chris Gleason, founder and CEO ofSimplicite Tax Loansand RAM Financial Group, expands on that distinction.
Multi-millionaires understand the difference between investing and speculation.
In other words, they only invest in opportunities where they can quantify the expected outcome from the start.
Investors recognize value and venture to take positions that represent a discount to that value, he said.
This provides a positive return (even if its on paper) right away.
Speculators take positions that they think or hope will increase in value in the future.
Multimillionaires typically steer clear of investments with unclear fundamentals.
To manage the inherent risks of investing, they focus on thoroughly understanding opportunities before committing their resources.
This focus allows them to makeinformed and confident decisionsto protect and grow their wealth, she said.
In other words, they rarely invest in securities they dont understand.
From our 30 years of experience, they dont invest in securities that offer unreasonably high returns.
They strive to earn high returns, but understand the market well enough to identify red flags.
Theyre looking at private opportunities with a measurable value if theres value, theyll look at it.
Millionaires avoid investing in things they do not control.
Millionaires also avoid investing in slow-growth investments that do not outpace inflation.
Examples include bonds, CDs and a lot of mutual funds with high expense ratios, he said.
Choose Investments Wisely
You dont need to be a millionaire to invest like one.
Choose investments with strong fundamentals.
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