INVEST LIKE THE WEALTHY
Even if You’re Lacking in Wealth
Invest Like the Wealthy, Even if You’re Lacking in Wealth
Many wealthy investors invest the same as you. However, there can be significant
differences. In most cases, you can match the investments of wealthy investors by
alternative means. There are few investment strategies you can’t mimic, even if
you’re an average investor.
Interestingly, very few wealthy investors are able to outperform the market average.
You might be better off with an index fund, but it’s interesting to see how the rich do
it. Learn some of their favorite investments and see how you can take advantage of
these strategies yourself.
Wealthy investors routinely take advantage of these investments:
- The wealthy often invest directly in businesses. Buying a significant stake in a
company or starting a company from scratch is risky, but the payoffs can be
huge. This type of attitude is what creates many of those with a high level of
wealth.
Average investor: It’s now possible to invest in startup companies via
crowdfunding. You can also start your own company from your laptop.
You might not have $25 million to invest, but you can get in on the ground
floor. - The wealthy invest in hedge funds. There are several requirements that must
be met before you can invest in a hedge fund, and one of them is having a net
worth of at least $1 million. Hedge fund managers can invest in just about
anything they please, including stocks, bonds, derivatives, real estate, futures,
and more.
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Hedge funds charge very high fees and are very risky, but the returns can
be very high.
Average investor: You’re not missing much. Over time, hedge funds
usually fail to outperform the market. You can do anything a hedge fund
manager can do, just on a smaller scale. This type of investing requires a lot
of expertise. - The wealthy are more concerned with risk than the average investor. Wealthy
investors tend to look at the expected return and determine if the risk is worth
the potential return.
Average investor: Learn how to assess the risk in a potential investment.
Then look at the potential return and the likely return. Ask yourself if the
possibilities are worth the risk. - Some wealthy investors invest in art and vacant land. These investments
aren’t very liquid, provide no income, and are highly speculative. However, the
right piece of art or 2,000 acres of timber land can result in a handsome payday.
Average investor: You can hit the local art show and search for a diamond
in the rough. You might have a better chance winning the lottery, though.
Vacant land is a risky investment, because there are taxes to pay and a
lack of cash flow. A better bet would be to purchase a home or small
multi-unit building and collect rent.
5.Wealthy investors get expert help. Most wealthy investors leave the investing
decisions to others. Many of those with a high net worth are too busy making
money to deal with investing it.
Average investor: You can buy this same help. Pay for an hour of an
expert’s time. If you’re interested in a long-term strategy, an hour of
advice every year or two is plenty. More active trading will require
educating yourself. There are endless books and websites on the subject
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of investing. Get busy learning.
You can invest like the wealthy if you’re willing to be a little creative. Wealthy
investors don’t have a huge advantage over the average investor. Keep saving and
investing to the best of your ability. Get some expert advice when you’re feeling lost.
One day you can be wealthy, too. How will you invest when you’re wealthy?