In volatile and scary markets like we're experiencing today, the super-rich have always found ways to protect and grow their wealth.
Some invest in luxury apartments in New York or London.
Others invest in art or gold.
Today, I’ll show you exactly what they’re investing in right now…
Then I’ll give you ways to copy their investments, move by move.
An X-Ray into the Wallets of the Rich
Goldman Sachs is one of the world’s top investment banks.
But it’s also one of the preeminent banks for super-rich families.
Recently, Goldman surveyed some of its super-rich clients. It asked them what they’re investing in, and how they’re allocating their capital.
It then compiled the responses into its Family Office Insight Report.
This report is like an X-ray into the wallets of the rich.
Let’s see what the X-ray looks like.
How To Invest Like the Super-Rich
Of the 166 family offices Goldman surveyed, about 70% have at least $1 billion.
Like all of us should do, the rich diversify their capital across many different asset classes, from stocks and bonds to real estate and crypto-currencies.
Here’s what they’re investing in — and how to copy their investments move by move.
Stocks — According to Goldman’s report, the family offices they surveyed hold just 28% of their wealth in publicly-traded stocks.
63% of their stocks come from the U.S., 21% come from various developed countries, and 16% come from emerging markets.
Furthermore, 43% of families invest heavily in tech stocks, and 34% invest heavily in healthcare.
How can you match their stock investments?
We suggest using low-cost index funds.
For U.S. stocks, consider the SPDR S&P 500 (SPY).
For international exposure, look at iShares MSCI Global (URTH).
For tech, consider Invesco QQQ Trust (QQQ).
And for healthcare, explore the iShares Global Healthcare ETF (IXJ).
Cash and Fixed income — The wealthy are allocating 12% to cash, and 10% to fixed-income investments like bonds.
As I wrote about last week, you can currently earn at least 5% on your cash and bonds — and you can earn that cash while sleeping easy at night. Here are three ways to do so:
EverBank — EverBank is a high-quality online bank that offers:
- 5.15% APY.
- No monthly maintenance fee.
- $0 to open an account and no minimum balance.
- FDIC-insured.
Schwab Value Advantage Money Fund® - Investor Shares — Schwab is a low-cost broker.
It offers a popular money-market fund that currently yields 5.16%. The ticker is SWVXX.
The fund’s stated goal is to “seek the highest current income consistent with stability of capital and liquidity.” Essentially, it invests in high-quality, short-term money-market investments from U.S. and foreign issuers.
T-Bills — T-Bills, short for Treasury bills, are short-term U.S. government-debt obligations backed by the Treasury Department. Terms range from four to fifty-two weeks.
If you’d like to lock in today’s ~5% rates before they potentially go down in the future, take a look at T-bills. As you can see below (courtesy of Bloomberg), you can lock in a rate of nearly 5% for the next year by buying one-year bills.
You can buy T-bills at online brokerages like Schwab, or at Treasury Direct, which is an official website of the U.S. government.
By the way, since T-bills aren’t taxable at the state level, their after-tax yield can look even more attractive.
You can explore Schwab’s T-Bill offerings here »
And you can explore Treasury Direct here »
Crypto-Currencies
According to Goldman’s survey, 32% of family offices are investing in digital assets — from Bitcoin to stablecoins.
If you’re interested in dipping your toes into this market, we’d suggest starting with a low-cost Bitcoin ETF. Eleven such ETFs have been approved thus far, including Bitcoin funds from name-brand investment firms such as Fidelity and VanEck.
Here’s a list of the eleven funds, along with their fees.
Alternative investments
Perhaps you were surprised that family offices invest just 28% of their assets into stocks.
But if you’re a long-time Crowdability reader, you already know that their big allocation tends to be somewhere else: to “alternative” investments.
Alternative investments include private startup companies and private real estate deals, as well as fine art, fine wine, and vintage sports cars.
As Goldman found, the super-rich allocate an average of 44% to these alternatives.
How can you copy their investments in this area?
For private startup companies and private real estate deals, we recommend sticking with Crowdability. We offer everything from free education — and essays like the one you’re reading now — to premium services that make specific investment recommendations.
(If you’re interested in accelerating your success with such investments, please call us at 844-311-3191 to learn about premium research services.)
You could also invest in ETFs like the iShares Listed Private Equity ETF UCITS (IPRV), or buy the stock of private equity giants like KKR or Blackstone — but keep in mind: if the stock market tanks, those shares will tank, too.
For art, check out our essay on Masterworks, which is here »
And for various collectibles, check out Rally Rd »
Beware!
Keep in mind, all the typical caveats about investing apply here:
For example, don't invest more than you can afford to lose, and be sure to dip your toe into the water before diving in.
Furthermore, many alternative investments aren't entirely "liquid." That means they can't necessarily be converted into cash at the snap of your fingers.
So don't invest your rent or grocery money into these offerings.
But if you're looking to invest like the super-rich, consider exploring some of the opportunities we described today!
Happy Investing.
Best Regards,
Founder
Crowdability.com
