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What are the Best Tips for High Net Worth Investors?

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  • Written By: Laura M. Sands
  • Edited By: Heather Bailey
  • Last Modified Date: 28 June 2018
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    Conjecture Corporation
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High net worth investors must be as careful as any other individual when it comes to asset protection, performing due diligence, understanding the risks involved with particular investments and being clear about how much risk can be tolerated. Due to the fact that high net worth investors are often targeted for fraudulent investment schemes, it is important for wealthy investors to also be particularly cautious of possible investment fraud. Employing professional, trustworthy advisers may help in this endeavor, but wealthy investors should always personally oversee large investments as an added precaution.

In an effort to minimize losses, high net worth investors should always personally know what they are investing in and diligently investigate the risks involved. Wealthy investors should never place retirement funds at risk and should always have an estate plan in place before beginning an investment career. Often, investments are not guaranteed to generate a profit and, often, investments can result in record losses. It is up to a high net worth individual to decide to engage in such an investment or not, but in order to make such a decision, diligent research and preparation is necessary. High net worth investors should also never agree to invest in something they do not fully understand.

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High net worth investors often delegate research and investment monitoring to attorneys, financial professionals and other advisers. While this is a common and effective practice, wealthy investors must also carefully vet these individuals and be careful to monitor the activities of each, as some may be less honest than expected. Regulatory agencies oversee investment firms and individuals who work in high finance, but fraudulent activity can sometimes be masked from these agencies until it is too late. To avoid this, high net worth investors must always carefully review account statements and the activities of professionals hired to work on their behalf to assure that investment finances are being fairly protected.

High net worth investors should create a habit of keeping notes on every conversation involving an investment. By doing so, should an investment ever result in a lawsuit or accusation of fraud, the investor can clearly recount details, dates, names and other information pertinent to the investment project. A clearly documented set of notes helps sort out any future discrepancies should they ever arise and also helps in keeping investment details organized.

Protecting your money is paramount. Investment firms and brokers work hard to attract high net worth investors and the landscape of opportunities is endless. It is important, however, to not only study the details of a prospective investment, but to also become familiar with key investment terms in order to minimize misunderstandings and maximize research efforts. Also, wealthy investors should always have an investment mentor or a group of individuals willing to listen to and exchange ideas.

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