The wealthy like to invest in stocks because when it comes time to sell, the taxes are typically lower than the rates on wage income — if, that is, the equity was held for more than a year. They can also afford to take bigger risks.
"Many who have higher net worth also have higher risk tolerance preferences and risk capacity, so target date and low risk funds don't always make sense," Carson said.
Long-term capital gains tax rates are zero, 15 percent and 20 percent for 2018, depending on your income. Federal tax brackets on wages go from 10 percent for the lowest earner to 37 percent for the highest. Short-term capital gains taxes on stocks held for less than a year are tied to your federal tax bracket.
The wealthy also look to manage those capital gains and losses to their tax advantage, Featherngill pointed out.
For example, there tends to be a "flurry of activity" at the end the year, with people trying to take losses to offset some of the gains they reaped earlier in the year. She's also seeing people investing in opportunity zone programs, which invest in low-income communities, as a way to defer capital gains.
It's something that can be done by anyone, not just the rich. "If the gain is sizeable enough, in terms of material enough for them, they can look at ways of deferring tax on the gains," she said.