It is well known among the wealthiest individuals and those who hope to one day belong to this group that they need their money to work for them. Making money is one thing, making money and spending it wisely is quite another. A financial advisor can help with high net worth Investment strategies.
Investment advisors help you decide how to invest. A good financial advisor will help you explore all possible financial options and consider different investments, not just stocks and bonds, based on the company’s financial situation and future financial goals.
The fact of the matter is everyone’s investment plans are different, based on their current financial situation and their future financial goals, meaning cookie cutter portfolios would not cut it. There are definitely some high net worth Investment strategies, especially in the ultra-high net worth community.
In this article we look at:
- ultra-high net worth investing
- alternative investments for high-net-worth individuals
- high net worth investment strategies
What is Considered Very High Net Worth?
According to Forbes, high-net-worth individuals are broken up into 3 categories.
- High-net-worth individuals (HNWI): individuals or households who own liquid assets valued between $1 million & $5 million.
- Very-high-net-worth individuals (VHNWI): individuals or households who own liquid assets between $5 million & $30 million.
- Ultra-high-net-worth individuals (UHNWI): individuals or households who own more than $30 million of liquid assets.
Now that we’ve established who qualifies as having an ultra-high net worth in 2022, let’s take a look at some of the ways UHNWI is investing.
What Do Ultra-High-Net-Worth Individuals Invest In?
The shortest answer to that question is… a little bit of everything. Ultra-high net worth individuals invest in several asset types. This means they invest in assets like:
- Stocks and Bonds
- Small Businesses
- Physical Assets
- Private Equity
- Foreign Market
- Savings Strategy
Of course, each ultra high net worth asset allocation going to varies from person to person. You’ve to consider what high net worth individuals want, from lifestyle to risk tolerance. With that in mind, let`s take a look at some of the several assets listed above, and how they invest into high net worth Investment strategies.
Stocks and Bonds
Probably the most general type of investment, buying stocks and bonds provides a fast and easy way to diversify your portfolio. Stocks offer the opportunity to earn greater returns on your money in the long term but come with some inherent risks. Bonds, on the other hand, are a very low-risk long-term investment, but they do not offer the favorable returns of stocks. Here are the other things to note include:
- Pro- Can meet life’s unexpected needs.
- Pro- You can plan for tax consequences.
- Con- Subject to extreme fluctuation, including severe depreciation or appreciation.
Private Real Estate
Investing in real estate has many benefits, especially as part of a larger overall wealth strategy. Real estate can grow your passive income, provide leverage, and help establish a more steady cash flow. Furthermore, real estate can naturally appreciate over time, making it a great long-term investment. Other considerations include:
- Pro- Higher income than stocks & bonds with more stable pricing during downturns.
- Pro- Offers tax advantages.
- Con- Non-Liquid investment, meaning you are locked in for many years.
Small Businesses and Private Equity
Another crucial part of a diversified portfolio for Ultra-high-net-worth individuals is investing in small businesses or private equity opportunities. Whether you are investing to passively multiply your money, or as a strategic partner, some investment opportunities pose the chance for such high (or low) returns. Other things to consider include:
- Pro- Opportunity to multiply your money anywhere from 3-10times.
- Pro- Chance to invest in different industries or passions.
- Con- The Risk of losing all of your capital.
Cash and Savings Strategy
Investing to increase your net worth is crucial, but having 100% of your money tied up might not be a great thing for you. In fact, the best high net worth Investment strategies includes saving plans. Saving can include minimizing cash outflows or simply holding cash. Also, consider:
- Pro- Funds desired lifestyle.
- Pro- Funds life & investment opportunities during recessions.
- Con- Incredibly limited income potential & devalued with inflation.
As an Ultra-high-net-worth individual or a HENRY (High Earner, Not Yet Rich), it’s crucial to have a diversity of investments and strategies. That way you reduce your risk while also optimizing your income potential.
A High net worth Investment strategies are more crucial for your money to work, Whether you are HENRY (High Earner, Not Yet Rich) or a UHNWI. Financial advisors know the high net worth Investment strategies and they help to put your money to work. Also, they address every aspect of your financial picture to help you achieve clarity for your goals and how to attain them. Whether you are a UNWHI or a HENRY, with their holistic approach to financial planning, Financial advisors will never leave you with unanswered questions.