Prepared by: Consulting Report
1. Introduction — Why Wealth Preservation Matters
For high-net-worth individuals, preserving wealth is often more difficult than growing it. Key risks include:
- Volatility in financial markets (stocks, FX, interest rates)
- Changes in tax regimes and regulations
- Inflation and currency depreciation
- Legal disputes over inheritance or succession
- Personal risks such as fraud, lawsuits, or unwanted attention
Therefore, wealth preservation should be approached as a comprehensive risk management strategy, not just tax optimization or investment tactics.
2. Core Principles of Wealth Defense
(1) Diversification
- Currency diversification: hold not only yen but also USD, EUR, CHF.
- Geographical diversification: combine Japanese assets with overseas equities, real estate, or funds.
- Asset-class diversification: balance equities, bonds, real estate, gold, private equity.
(2) Liquidity
- Over-concentration in real estate or private equity reduces flexibility.
- Keep 20–30% of total wealth in liquid assets (cash, short-term government bonds, money market funds).
(3) Leverage Control
- Excessive borrowing increases default risk during crises.
- Prefer low leverage or debt-free strategies to maintain financial stability.
3. Legal and Structural Tools
(1) Asset Management Companies
- Utilize corporate structures to benefit from lower tax rates and expense deductions.
- Facilitate flexible succession via transfer of company shares.
(2) Trusts
- Use family or private bank trusts for risk segregation and smooth inheritance.
- Prevent family disputes over estate distribution.
(3) Insurance
- Leverage life insurance to secure funds for inheritance tax.
- International insurance products can also serve as diversification.
4. Investment Strategies for Preservation
(1) Equities
- Include defensive sectors such as consumer staples and infrastructure.
- Use hedging strategies (options, hedge funds) to mitigate downside risk.
(2) Real Estate
- Focus on prime urban rental properties with stable income streams.
- Monitor policy risks such as changes in property tax or zoning laws.
(3) Precious Metals & Tangibles
- Gold acts as a hedge against inflation and currency crises.
- Platinum, fine art, and collectibles can diversify and enrich lifestyle value.
(4) Offshore Assets
- U.S. ETFs, Swiss or Singapore bank accounts for international diversification.
- Adjust exposure in line with geopolitical developments.
5. Risk Management
(1) Legal Risk
- Maintain a team of lawyers, accountants, and tax advisors.
- Secure advisory contracts for rapid response to policy changes.
(2) Personal Risk
- Limit the circle of trusted individuals.
- Avoid flaunting wealth on social media to reduce exposure.
(3) Psychological Risk
- Resist the temptation of excessive returns or vanity-driven spending.
- Adopt the philosophy of “quiet wealth” focused on longevity and sustainability.
6. Generational Wealth Transfer
- Education: instill financial literacy in heirs to build responsible stewardship.
- Succession planning: combine wills and trusts to prevent family conflicts.
- Philanthropy: channel part of the wealth into charitable foundations for legacy building.
7. Conclusion — The Philosophy of the Quiet Wealth Holder
True wealth holders prioritize defense over expansion, aiming to pass on assets securely across generations.
Their strategies combine diversification, trusts, corporate structures, tangible assets, and international positioning—alongside a deliberate choice to remain discreet.
