How to Invest Like the Super-Rich

How to Invest Like the Super-Rich

Forbes did an article some time back that shared the asset allocation of super-high-net-worth individuals. That means we’re not looking at someone with a measly $10 million to spare but someone with a $200,000,000 investment portfolio.

So here’s what someone who has the GDP of a small island nation in their back pocket would invest their money:

asset-allocation-of-the-super-rich

Source: Forbes

At first glance, it’s easy to tell that 44% of their assets are in equity (global equity, US equity, private equity, and venture capital). 18% of the portfolio is allocated to hedge funds (which could also invest in equity), 17% to bonds, 6% to real estate, and the rest making up the difference.

Of course, it is not possible for the average man-in-the-street to invest exactly like the super-rich. You probably wouldn’t have the same opportunities in venture capital, private equity and direct investments for example.

But even then, it’s clear as daylight that equity is the asset of choice for the super-rich to park their money. According to research done by Russell Investments, equity has given the highest returns for investors when compared to bonds, commodities, and cash.

Asset Class Dashboard - Helping Advisors   Russell Investments

Source: Russell Investments

So what does the pie chart and the research tell you?

It’s quite clear, isn’t it? That if you want to grow your wealth, allocating the majority of your assets in equity is almost certainly the way to go. Just like the super-rich.

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Adam Wong is the editor-in-chief of The Fifth Person and author of the national bestseller Lucky Bastard! which made the Sunday Times Top 10 Bestseller’s List in 2009 and Value Investing Made Easy which made the Kinokuniya Business Bestseller’s List in 2013. In 2010, he appeared on U.S. national television on the morning show The Balancing Act. An avid investor himself, Adam shares his personal thoughts and opinions as he journals his investing journey online.

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