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Concerns of Being A High-Net-Worth Individual

When we say high-net-worth individual, what comes to your mind? Unlimited wealth, lavish lifestyle, and so on. But as the saying goes, “With great power comes great responsibility,” it’s important to be aware of the potential pitfalls that can threaten your wealth and to take proactive steps to avoid them. From the dangers of overspending and the risks of relying on poor financial advice to the importance of proper estate planning and protecting against scams and fraud, this blog has got you covered.

But it’s not just external threats that can jeopardize your financial well-being as an HNWI. It’s also important to be aware of the internal loopholes. From succumbing to the temptation of overspending and living beyond your means to letting your ego or emotions cloud your financial decision-making, there are a number of ways in which HNWIs can undermine their own success. 

In this blog post, we’ll explore problems HNWIs may face and offer solutions for navigating them.

Let us start with understanding who an HNWI is. 

How Much is High-Net Worth?
 

How Much is High-Net Worth?

 

A high-net-worth individual (HNWI) is someone who has accumulated a significant amount of wealth. This wealth is typically measured in terms of investable assets, such as stocks, bonds, and cash; these are what rich people are investing in. However, it can also include real estate, closely-held businesses, and other non-liquid assets.

An HNWI is someone with at least $1 million in investable assets. 

HNWIs may have built their wealth through their own hard work and successful business ventures, or they may have inherited it or received it through other means. Regardless of how they came to become wealthy, these individuals have significant bank figures to fall back on and are in a position to make a substantial impact with their wealth.

Now, being an HNWI is not only about wealth & riches. As mentioned before, it comes with its unique set of problems. In the next section, let’s discuss some pitfalls/disadvantages that high-net-worth individuals might face.

Problems of Being A High-Net-Worth Individual

Problems of Being A High-Net-Worth Individual

 

Following are some disadvantages that come along with massive numbers in your account:

  1. Higher tax liability- HNWIs may be subject to higher tax rates, reducing their disposable income and significantly impacting their wealth. High-net-worth individuals, like all taxpayers, are responsible for paying taxes on their income, capital gains, and other taxable events. 

In addition to income tax, HNWIs may also be subject to other types of taxes, such as:

  1. Self-employment tax – If an HNWI has a business or is self-employed, they may be required to pay self-employment tax. This tax covers the individual’s contribution to social security or medical care.
  2. Estate tax – If a high-net-worth individual has a large estate, they may be subject to estate tax when they pass away. The estate tax rate is currently 40% for estates with a valuation of $11.7 million (tax years 2021 & 2022).
  3. Gift tax – If an HNWI makes gifts to others that exceed certain thresholds, they may be subject to the gift tax. The gift tax rate is currently 40%.

If you need some ideas about what to read next, here they are:

 
  1. Complicated estate planning- HNWIs may need to carefully plan for the distribution of their wealth to ensure that it is carried out how they want it to be.
  2. Limited financial products and services- HNWIs may have specific financial needs that are not always well-served by traditional financial products and services, which can be frustrating.
  3. Asset protection– HNWIs may want to protect their assets from creditors, lawsuits, and other threats. Trust, insurance, and other estate planning tools can help accomplish this.
  4. Inheritance challenges– If a high-net-worth individual owns a business, they will need to consider how the company will be managed and passed on after their death. This can be a complex process and may involve the use of buy-sell agreements, trusts, and other estate planning tools.
  5. Family dynamics – Estate planning can involve difficult decisions about the distribution of assets and the roles that the family members will play in managing the estate. HNWIs may need to navigate complex family dynamics and ensure that their estate plan reflects their legacy.

These are some pitfalls or demerits of being a high-net-worth individual. Now, you must be wondering what the solutions to these problems are. We will discuss those in the following paragraph. 

Solutions For High-Net-Worth Individuals 
 

Solutions For High-Net-Worth Individuals 

 

We have discussed the problems or disadvantages associated with being an HNWI. A few ways in which HNWIs can avoid financial pitfalls are as follows:

  1. Work with trusted advisors – One of the critical ways that HNWIs can avoid financial pitfalls is by building a team of trusted advisors who can help them to make informed financial decisions. This may include financial planners, accountants, lawyers, and other professionals who can provide guidance on a range of wealth management issues.
  2. Diversify investments – Diversifying your investment portfolio can help to mitigate risk and protect your wealth. This may involve investing in various asset classes, such as stocks, bonds, real estate, and alternative investments like hedge funds. Hedge funds like Secvolt can help you make extraordinary figures as well as give you other benefits such as diversification and risk management. 
  3. Engage in proper tax planning – Proper tax planning can help HNWIs minimize their tax burden and maximize the wealth they can pass on to their heirs. This may involve strategies such as setting up trusts or charitable foundations or taking advantage of tax-advantaged investment vehicles.
  4. Develop a comprehensive estate plan – A well-thought-out estate plan can help ensure that your wealth is distributed per your wishes after you, with minimized taxes and other costs. This may involve setting up trusts, wills, and other legal documents.
  5. Consider alternative investments – One solution that may be particularly beneficial for high-net-worth individuals is to consider investing in alternative investments like hedge funds. Investing in a hedge fund like Secvolt can offer HNWIs a range of other benefits in addition to its potential for higher returns. 
  6. Manage risks carefully – It’s important to consider the risks associated with any financial decision and to have a plan to manage them. This may involve working with advisors to develop a risk management strategy. 
  7. Make decisions based on sound financial principles – It’s easy to let your emotions cloud your monetary judgment, but it’s important to stay level-headed and base your decisions on sound financial principles. This may involve seeking the advice of trusted advisors or taking the time to research and understand your options thoroughly.

These are some ways how HNWIs can overcome the challenges related to their finances & wealthy investments. In the final section, let us look at an investment alternative that has been providing HNWIs with outstanding wealth management services and is a one-stop solution for the investment portfolio of the wealthy. 

The Bottom Line

 

Being an HNWI comes with its own set of challenges and concerns. From complex wealth management to higher tax liabilities, HNWIs may face a range of issues that can be difficult to navigate. It’s vital for HNWIs to be aware of these challenges and have a calculated high-net-worth investment strategy to overcome them. 

Working with trusted advisors, diversifying investments, engaging in proper tax planning, and developing a comprehensive estate plan are just a few of the ways how HNWIs can protect and grow their wealth. 

Additionally, the professional management and diversification offered by hedge funds like Secvolt can provide HNWIs with the peace of mind that comes from knowing their investments are in capable hands. As a quantitative hedge fund, Secvolt utilizes advanced quant models and data-driven short-term trading strategies. This approach can mitigate risk and generate amazing results for investors. 

By carefully considering the potential advantages of investing in a hedge fund like Secvolt, high-net-worth individuals can take an essential step towards overcoming the wealth and financial challenges they may face.

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Ashish Verma

Ashish Verma is the founder and CTO of Secvolt, with close to 10 years of experience in the IT industry. He has been the technical backbone of the company and has worked tirelessly to make the technical infrastructure robust. He is a passionate entrepreneur who generates solutions that have the potential to bring change.

In order to ease the client’s interaction with Secvolt, he has strived to develop the business’s technological foundation and establish a user-friendly platform. Ashish has also contributed substantially to smoothening the company’s administration and ensuring that there are no lacunae in the broad structure of the organization. 

Early Years

Coming from a middle-class family, he was aware of the problems that people faced while using technology. He sought to create something that was simple to use yet had a powerful effect. As he studied computer science, he became eager to offer a solution to real issues. He began his professional career at Amdocs, where he gained expertise in client management while catering to more than 20 clients. Later, he moved to Citicorp, where he had exposure to the investment industry. His time at Amdocs and Citi enabled him to produce high-standard, efficient, and scalable technical infrastructure.

He left corporate jobs for his startup because he was passionate about working on the concept of a smart city platform. He expanded the concept internationally and even collaborated with Global Dignity-Kuwait. Things didn’t work out for him the first time. He states, “My failures didn’t stop me from experimenting and trying new things.” He rose from the ashes like a phoenix and founded FewerClicks, an End to End IT solution company.

He worked on the creation of Solster Finance, a decentralized financial platform based on the Solana blockchain. He created this platform single-handedly which has helped the team raise a $1M investment and a revenue of more than $5M within 6 months of launching. 

He has previously worked on many blockchain technologies and cryptocurrency ventures, which include Decentralized Finance Applications (Defi), Decentralized Applications (Dapps), File Contracts (SIA, record-keeper), Smart Contracts (rust, solidity), and NFT Development. His experience and effective communication have helped many team members understand Secvolt effectively and the underlying technology it is powered by.

He possesses the ideal combination of strategic thinking and excellent business insight. He is responsible for formulating technical aspects of the company’s strategy to guarantee alignment with business objectives. With his drive to experiment with new technologies, he has helped Secvolt achieve a competitive edge. Being in charge, Ashish never holds back in encouraging the different departments to make profitable use of technology, helping to grow as an unstoppable team at Secvolt!

Hanif Shaikh

Hanif Shaikh is the founder and CMO of Secvolt, with over 8 years of experience in the industry. He plays a crucial role when it comes to the growth of Secvolt. Since the beginning, he has acted as a mentor for each and every employee of the company, and he makes an effort to be accessible to his staff anytime they need him. 

Hanif first entered the Blockchain and Crypto world in 2016, and nothing has stopped him since. He views blockchain as a transparent platform that provides authority and accountability back to the people. He consistently believes that “overcommunication is better than miscommunication.” He has lived by this motto with his staff, clients, and networks.

Early Years

Hailing from Gujrat, a state in India, he is following his dream to contribute to making this world a better place. In the process, he has struggled, made some mistakes, and learned lessons from those mistakes to achieve success in life. His entrepreneurial attitude dates back to his childhood when he learned from his father’s business and aspired to have it all. He came from a humble background and had ambitions to succeed in life.

He has developed two successful businesses from scratch, and in the process, he has inspired young people to start their own businesses. He was an integral part of the Quora Mumbai Meetups and helped it become a great success in a short period of time. Later, he began organizing meetups to raise awareness about blockchain, cryptocurrencies, and their applications. He also shared his knowledge of ICOs, highlighted reputable ICOs, and established a small cryptocurrency community on WhatsApp groups.

He chose to go on a Blockchain Tour in India in 2019 and met some fascinating people. Throughout his journey, he has been able to build an extensive and robust network that has aided Secvolt’s growth. Because of his expertise and understanding of the Crypto Industry, he has been featured on several news channels and has advised the youth on the subject.

He is in charge of the company’s marketing operations and is responsible for developing its marketing strategy and vision. He oversees a group of passionate marketing professionals and plans promotional strategies with the goal of making  Secvolt a global brand. 

He is a perfect blend of a practical attitude and innovative business acumen. He believes in the ability of individuals to perform exceptionally well when given an environment to experiment and explore their passions; a culture that he has built at Secvolt.

Divakar Choudhary

Divakar Choudhary is the founder and CEO of Secvolt who has been trading for more than six years now. He started the business in 2018 with the conviction that if anybody could dominate the market, it was him. He poured all of himself into the business and turned Secvolt into a market-beating machine.

Divakar developed the fundamental quant models that perform risk management and capture alpha using his skills from the previous organization and his time spent in the market. In order to make the system effective, he backtested risk mitigation algorithms and worked on them for more than 4 years to produce results.

Early Years

He began his crypto journey in 2013 after getting his first gaming Laptop and melded in with the Blockchain community like sunbeams on the ocean. He created many YouTube channels at the age of 15 and businesses by the time he was 17. Technology has always piqued Divakar’s interest. He endeavored and succeeded at freelancing in his effort to achieve financial independence. However, he soon realized that freelancing would always keep him in the rat race, and the only way out would be to build a machine yielding generational wealth.

Soon, he started trading using his own capital but suffered a loss in the market. He says, “95% of people lose money & the rest 5% make money from the loss of those 95%.” He then began working on an effective technique to be included in this 5% after losing part of his own assets during the early stages of trading. He began evaluating quant strategies using statistical models.

With his methodology, he once produced a 20% ROI in a single month. With the zeal of creating something exceptional, he borrowed money from friends and family and generated decent returns for them using primitive quant models. Month after month, the system’s efficiency and the competence of the man behind it allowed for excellent market returns.

In the beginning, Divakar worked on his laptop for over 18 hours. It took every ounce of his energy as he executed about 530+ deals daily for 4 years to create this company from the ground up. In 2021, he increased his volume by 827%, trading a total of $52 million and hitting a single account.

In his words-

“What does becoming “THAT” GUY mean to you? Who did you need when you were young? Be that person!”

He is a perfect example of someone who followed his passion and made a fortune from it! He dreamt of creating generational wealth as a youngster, envisioned it as an adult, and is now making it a reality with Secvolt!