Investment Strategies for High Net Worth Individuals — PillarWM

When it comes to accumulating wealth, most investors follow the same plan. They buy stocks, invest in mutual funds, and open a retirement or savings account, or they may invest in real estate. While these are all great ways to secure your future, none of them will lead to an abundance of wealth. High net worth individuals do a lot more than just “save for the future.”

They use investment strategies for high net worth individuals and create a snowball effect. This increases their wealth and enables them to pass it on to their children and grandchildren. They take more considerable risks because they have more money at their disposal and know their investments will work for them. A high net worth individual never has to wonder, “can I get a 10% return?” because safety is not something they’re concerned with. If you’re a high net worth individual, you’ll be glad to know that Pillar Wealth Management can provide investors who have $5 to $500 million in liquid assets with several wealth management solutions. To learn more about some of the strategies and solutions we provide, request a free copy of our book 7 Secrets To High Net Worth Investment Management, Estate, Tax, and Financial Planning.

Table of Contents
They Always Have a Financial Plan They Start Investing Early They Don’t Try to Time the Market They Only Invest in What they Know They Stick to Logical Cash Flow Management Set and Forget They Ensure their Money is Quick They Look for Infinite Returns They Diversify for a Smooth Journey

What Are Common Investment Strategies of High Net Worth Individuals?

That said, here are some investment strategies you may see high net worth individuals use.

They Always Have a Financial Plan

A financial plan can help individuals understand their risk tolerance and how it can change as they move ahead in life (eventually toward a retirement goal). Sticking to a sound and logical plan can help a high net worth individual avoid assessing the market based on their emotions. It helps them stay disciplined, which is a vital factor if you’re investing for the long run.

When a high net worth individual is honest about what they want to achieve, you can bet your bottom dollar they’ll have a financial plan to help them focus on the assets in their portfolio regardless of the kind of portfolio they have, and they never have to wonder “what is a safe investment strategy.” If you want to learn how you can keep your wealth safe, please talk to one of our wealth managers for further assistance.

They Start Investing Early

The longer an amount stays invested, the higher its potential to grow. Investors do this because when they start early, they get to capitalize on the compounding effect, giving them the opportunity to buy at an average cost every time. Someone who starts contributing to their retirement account at the age of 20 will have a definite edge over someone who starts doing it at 30.

By the time both of these individuals reach the age of 65, the one who started early has a higher chance of having a safe retirement. This also depends on consistency and the amount both individuals contribute to their accounts. If you’re an investor with $5 million or more in liquid assets, you can learn about some of our top investment strategies by studying our special guide.

 They Don’t Try to Time the Market

Even though time is an investor’s friend in every financial market, a high net worth individual does not try to time the market for short-term decisions. They know better than anyone that timing the market can be difficult, and they prefer not to waste their time on this. Investors miss out on those rewarding recovery days when they obsess over getting out at the right time and then returning at the right time. When they come back into the market, they have to do with smaller returns.

As ironic as it may seem, the market’s best days are clustered within the worst performance days. Staying in the market for the long run is how market cycles allow you to achieve the best results. To learn more about how you can expand your portfolio without compromising, along with some investment strategies for high-net-worth individuals, you should consider getting a copy of our book.

They Only Invest in What they Know

A high net worth individual spends a good portion of their life investing in various financial instruments. It’s easy to say that they know a lot about investment and money in general, but even though they’re experienced, they never invest in something they don’t understand. High net worth individuals understand that some investment strategies can be far too complex or obscure to keep up with. Before they invest in an industry, they ensure that they understand the sector and the company they’re interested in.

Many high net worth individuals are drawn to companies that produce the products they regularly use. That said, they can still confuse a good product with a good investment option. For instance,if you’re putting money into a brand-new restaurant chain that’s getting good reviews, you’ll have to do some research. Devote some time to finding out whether this restaurant is sustainable and the items are attractive.

That said, many high net worth individuals don’t have the expertise or time to understand the intricate details of an investment decision. Every investment decision has certain tax implications, and understanding which bracket you qualify for can be complex. That’s where we come in, to know how you can legally reduce the amount you owe in taxes, go through our guide which discusses brilliant tax strategies for investors that have $5 million or more.

They Stick to Logical Cash Flow Management

Setting up a retirement savings account for automatic contributions is one way of doing this. However, you can also apply the strategy of investing money automatically (every month at least) during the years you’re earning money. Moreover, you should also create a rainy day fund which has at least three to six months of living expenses. Once these entities are established, or as you get your savings account off the ground, you can also automate contributions into your brokerage account.

Now, you have to decide how much money you’ll need to spend every month. If you want to know more about planning for your retirement efficiently, please speak to our wealth managers.

Set and Forget

Once they’ve decided on the amount they will put in their savings account, they sit back and watch their investments grow. After all, their purpose is not to day-trade; they only want their savings to increase. For most high-net-worth individuals, this is the best strategy. They can do this by accessing the equities market instead of picking an individual stock.

They Ensure their Money is Quick

If you’ve ever heard the phrase “speed of money,” it’s possible you’ve heard it in the context of the overall economy. In this sense, the speed of money decides how quickly money changes hands in a country’s economy. It’s the speed at which consumers spend their money     If money is spent quickly, a country is considered to have a healthy economy. When money is spent slowly, a country may go into a recession.

The problem with most investments is that your money can get stuck in one place, and you don’t have the freedom to spin it. For instance, if you’re investing in the stock market, your money is stuck to the stock you sell or buy. While the stock may grow in value, you can’t have cash in your hand unless you sell your holdings. However, you get money flowing towards you when you invest in something that generates a cash flow, such as a storage unit, a mobile home, or an apartment. Not just intangible value, you get cash.

This, in turn, spins the wheel, and your investment grows with your wealth. For high-net-worth individuals, their wealth is like a mini economy. The speed with which the money spins ultimately decides how healthy their bank account will look. In their case, money flows from one investment to another, creating exponential growth opportunities. Does your investment strategy include investment gains that can help you in other ventures?

These are some of the questions you’ll have to ask yourself when you sit down to formulate an investment strategy. Whatever you do, don’t let the wheel stop so that you can buy a fancy car or fund your retirement. Instead, use your investments to invest in more investments. At one point, you’ll be able to take out a small amount from your account to fund your dreams. However, if you’re still facing challenges in estate planning, please go through our guide that is for investors with $10 million or more.

They Look for Infinite Returns

Infinite returns are something high net worth individuals know about, but this isn’t discussed regularly among investors. Infinite returns mean that you get your principal investment amount back by selling an asset. You then gain cash flow or interest on your investment forever. You receive infinite returns on your investments when building equity or getting cash flow. This way, you don’t have money tied up in an investment.

High net worth individuals don’t like having their money tied up in illiquid assets. This limits their ability to capitalize on investment opportunities that may arise. Investing to churn out infinite returns is one way to tie up your money for a short while. This way, you’ll be able to use it sooner.

There are several ways you can achieve infinite returns on investment, but one of the simplest is to invest in something that generates cash flow. The more cash your investment generates, the faster you’ll achieve infinite returns. Once you’ve collected the capital amount, you can use the money to grow your portfolio and invest in an asset again.

With the help of a wealth manager, you can set up a trust for the people close to you. By establishing a trust on a proper foundation, you can ensure that your wealth is available to the people who will rely on you at a future date. To learn more about efficient estate planning, request a free copy of our book The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million.

They Diversify for a Smooth Journey

One brilliant benefit of long-term investing is that it can smooth out the effects of volatility with time, so you can deal with volatility while diversifying at the same time. Apart from diversifying your portfolio with bonds, it could benefit you to buy stocks in different sectors of the economy. That said, beyond bonds and stocks, you may also want to invest in small portions of other asset classes.

Buy some gold, equities, cryptocurrency, and cash. You’ll never know which one of these will turn into a hedge if the economy sees high inflation rates. Tax brackets may change because of rising inflation, and you may have to give up a higher percentage of your monthly earning. To know more about how you can plan ahead, please talk to one of our wealth managers about our tax planning services.

Working with Pillar Wealth Management

Pillar Wealth Management is one of the top choices for high net worth individuals all across the country. The wealth managers working for us have decades of experience, which only expands with every passing year. We’re upfront about the fee we charge, and we work to provide solutions to help you diversify. We treat every investor with a unique outlook because we believe every investor has a different background.

To know more about us, set up a free complimentary video meeting with our wealth managers to know about the wealth management solutions we offer.

 

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