3 Ways Mark Cuban and Other Millionaires and Billionaires Protect Their Wealth

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Entrepreneur and investor Mark Cuban, with an estimated worth of $5.7 billion, likely doesn't have many financial concerns. However, even when he was a millionaire, he stressed the importance of safeguarding his wealth to maintain long-term financial security, and he continues to follow many of the same habits he adopted back then.

CNBC recently reported that Cuban reached the millionaire mark in 1990 after selling his software company MicroSolutions for $6 million, personally earning around $2 million. Even though Cuban was in his early 30s at the time, he planned to approach his finances with a long-term strategy.

So I made $2 million, and I specifically remember calling my broker and saying, 'Invest my money in a way that a 60-year-old would, so I can enjoy it for a long time.'

Within just a few years, Cuban found himself joining the billionaire ranks when another one of his companies, Broadcast.com, was sold for more than $5 billion.

Here are three other ways that the wealthy often protect their wealth.

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Don’t Overspend

Even now, as a multibillionaire, Cuban doesn’t splurge on luxuries he doesn’t require or desire. As he stated to CNBC, he doesn't own a yacht or employ butlers or even hire house cleaners. Most of his time is spent with loved ones or running Cost Plus Drugs, an online pharmacy aimed at making prescription medication more affordable.

"I think less about making money and more about the positive impact I can have on as many Americans as possible," Cuban said.

It's actually quite common for millionaires to be frugal.

Plan Strategically

Millionaires typically don't rely on luck but rather make careful plans for their wealth and success.

A 2023 study of 580 Americans by Ameriprise discovered that 80% of individuals who have at least $1 million in investable assets consider "financial planning" to be a "key factor" in their wealth accumulation. Crafting a thorough plan for safeguarding your wealth typically involves securing sufficient liquidity to mitigate risks, insuring your assets, employing offshore trusts to shield personal and business assets, and creating a comprehensive estate plan.

Maintain a Diverse Portfolio

This applies to any investor, regardless of your financial resources. But it's especially crucial for millionaires as a diversified portfolio helps prevent significant financial losses when one asset class experiences a downturn.

Millionaires spread out their investments by putting them into different categories such as stocks, bonds, and real estate, etc.," Harris wrote. "From my expertise, I've seen that many also spread investments across different countries like the U.S., Switzerland, and the Cayman Islands. This strategy lessens the risks linked to economic downturns and regulatory changes.

Wealthy individuals usually plan to devote around 65% of their available investment funds (not counting real estate) to stocks and 25% to bonds, according to Harris.

“Investing in a variety of asset classes and geographic locations can help minimize portfolio risk while potentially maintaining or increasing the opportunity for positive returns,” he wrote.

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3. **Charitable Donations and Family Planning**: Many billionaires and millionaires also use their wealth to give back to society through charitable donations and educational resources. They also plan for family succession and estate planning to ensure the security of their loved ones.