While the typical investor is often advised to “stay the course,” the ultra-wealthy usually have someone whose sole job it is to move their money around, taking advantage of the natural ebb and flow of investment returns.
While they don’t buy and sell investments willy-nilly, they will certainly divest and invest based on economic and geopolitical events.
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Where are the wealthiest people putting their money right now? And should you follow suit? Here’s what you need to know.
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Real Estate
Real estate would seem to be an investment that the ultra-wealthy would be fleeing from, not to, given the recent high interest rates. But even with as rates rose, prices are continuing to rise as well, likely because inventory is down.
In The Wealth Report, Knight Frank found that more than one in five “Ultra-High Net Worth Individuals” (UHNWIs) planned to purchase residential real estate this year. Nearly that number is expected to invest in commercial real estate, which is rebounding after a slow 2023.
Real estate has long been a popular choice for wealthy investors, but the last few decades have shown that it can be volatile.
For investors with more modest portfolios, a real estate investment trust (REIT) or a real estate exchange-traded fund (ETF) can provide a pathway to real estate investing.
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Alternative Investments
Alternative investments can include a lot of different things: private equity, venture capital and even collectibles.
These investments are not traded on securities exchanges; rather, they are bought and sold directly, in the case of collectibles like watches, cars, coins, and art, or equity investments in private companies, like venture capital, angel investment and private equity.
Alternative investments provide a hedge against more traditional investments like stocks and bonds, according to alternative investment firm KKR. KKR expects alternative investments to grow to $24 billion by 2028, up from $9 billion in 2018.
Bonds
Bonds are kind of the unsung heroes of investing. They lack the excitement of stocks, the appeal of mutual funds and the intrigue of alternatives. They provide a predictable return on your investment.
But the super wealthy know that predictability, while it may not make you rich fast, also won’t make you poor fast — or at all.