Yana Iskaeva | Moment | Getty Images
The lives of the ultra-rich are very different, and their investment strategies are very different from the average investor’s portfolio.
“While there is no official threshold, being a millionaire, or an individual with a total net worth of over US$100 million, is a good benchmark for entry into the 0.001% club,” said Kevin Teng, CEO of super wealth firm WRISE Wealth Management Singapore. High net worth individuals.
Globally, the population The number of millionaires is approximately 28,420Data from WRISE shows that the main concentrations are in New York City, the Bay Area, Los Angeles, London and Beijing.
In the United States, when you buy an NFL team, they knight you.
Salvador Buscemi
CEO of Dandru Partners
“These cities have sound financial infrastructure, vibrant entrepreneurial ecosystems and lucrative real estate markets, making them attractive destinations for the ultra-rich,” Teng told CNBC.
Teng said this “epitome of extreme wealth” population is selective in its investments.
“Today, they’re not investing in things that make them rich, quick, illiquid,” said Salvatore Buscemi, chief executive of Dandrew Partners, a private family investment office. “That means they’re not really investing in publicly traded stocks, for example.
“Believe it or not, they actually don’t even invest in cryptocurrencies,” Buscemi told CNBC via Zoom. “What they seek is to protect their heritage and their wealth.”
1. Real estate
As a result, millionaires’ portfolios often feature “very strong, stable real estate,” Buscemi said. These wealthy people lean towards ‘trophy assets’ Class A propertiesor investment-grade assets typically constructed within the past 15 years.
Port of Monaco on the French Riviera.
Sylvain Sonnets | Getty Images
Michael Sonnenfeldt, founder and chairman of Tiger 21, a network of ultra-high net worth entrepreneurs and investors, told CNBC that real estate investments typically account for 27% of these individuals’ portfolios.
2. Family offices as investment vehicles
Andrew Amoils, an analyst at global wealth intelligence firm New World Wealth, said the funds of an individual with such wealth are typically managed by a single family office that handles everything, including estates. , household bills, credit cards, immediate family expenses, etc.
“These family offices often have philanthropic foundations and venture capital arms that invest in high-growth startups,” Amors said.
3. Alternative investments?
Dandro’s Buscemi said ultra-high-net-worth individuals are also exploring the possibility of buying stakes in professional sports teams.
“This is a very, very isolated group that needs more than just money,” he said.
Buscemi explains that exclusivity is a major attraction because these wealthy individuals want to associate with others of similar status. Owning shares in sports teams is a way for these people to legitimize their status, he said.
Dallas Cowboys owner Jerry Jones welcomes fans at training camp at the River Ridge Complex on July 24, 2021 in Oxnard, California.
Jayne Kamin-Oncea | Jayne Kamin-Oncea Getty Images Sports | Getty Images
“In the United States, when you buy an NFL team, they knight you,” he said, just like when American businessman and billionaire Jerry Jones bought the Dallas Cowboys in 1989. ) Same.
WRISE’s Teng also pointed out that 0.001% of people are more focused on fixed income, private credit and alternative investments. Private credit is gaining traction as investors look for sources of income outside traditional markets, he said.
“This trend reflects growing interest in non-traditional assets with unique risk-reward characteristics,” Teng said, noting that alternative investments include venture capital, private equity and real assets.
About The Author
