How America's rich manage their money

Just like us, the rich want to maintain their lifestyle, preserve wealth and have money for their heirs or philanthropy, Karen Blumenthal writes in The Wall Street Journal. And when it comes to investing, there are several ways the rest of us should take a cue from them. Let's look at Sam Walton.

The very wealthy have a plan. Sam Walton's plan started in the early 1950s, when, on the advice of his father-in-law, he set up a family partnership to own his two variety stores. By doing that, he began planning his estate and building family wealth years before he opened the first Wal-Mart in 1962.

The very wealthy live below their means. Walton, who died in 1992, was famously frugal, driving an old pickup truck and flying coach.

The very wealthy value cash flow. One of the most painful lessons of 2008 was the recognition that we need to keep enough in cash or liquid investments to weather a stretch when the value of everything else is in flux.

The very wealthy focus on risk, not return. Larry Palmer, managing director, private wealth management, at Morgan Stanley Smith Barney, said he has never had a client say, "My objective is to have my family wealth beat the S&P 500." Rather, he says, clients focus on what kinds of risks they are taking with their portfolio.

The very wealthy hang on. The super-rich don't sell because they are fearful—though some may be selling right now for investment reasons, such as cutting the tax bite on holdings with big gains. The Walton family ownership of Wal-Mart stock hasn't changed since late 2002, when some shares were transferred to charitable funds.