Ep 166 - Where Do The Mega Wealthy Invest?

Two months ago an amazing mentor in our mastermind talked about what the 1% of 1% do with their money. It’s actually very interesting to know where the ultra wealthy put their money and we have found the top three areas where the rich spend their treasure. They invest 27% of their money in real estate, 22% in private equity, and 25% in public equity. It’s fascinating to know that we are on the right track with the mega wealthy because like us, they love to invest in real estate.

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 What do the elite rich do with their money? We did some digging into the data on https://tiger21.com/ about their investments and we found they heavily capitalize on real estate like us. In quarter three of 2020, to quarter two of 2021, they have investment allocation of 27% into real estate, 22% went into private equity, and 25% went into public equity. You can see almost the same result in the quarter two of 2019, and similar results in  the 20s. 

There is consistency on the part of the rich to invest in real estate especially in multifamily because they know it is the right way to get really high returns. It has a stable nature and a strong hedge against inflation. The rich are careful about their decisions because they want to invest in a recession proof type world where they will be less affected by the volatile market. They follow a track record of success.

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Transcript

Hey everybody, Flip and Dani here, founders of the Freedom Real Estate Group Family of Companies, and welcome to another episode of our podcast which is called Freedom Through Passive Income. There we go. 

And this episode is entitled, Where Do the Mega Wealthy Invest? And this was just something that we saw a presentation of a couple of months ago not where the 1%, what the 1% do, what is what the 1% of 1%? And I didn't know about this but there's a website called Tiger 21. And not Tiger Beat right wasn’t that the teen magazine. I have no idea. Ha ha ha

Anyway, so at Tiger 21 the website, you have to have $50 million in minimum in investable assets, just to be a part of the website. So you're saying it's exclusive? Yeah, it’s a wee bit exclusive. Gotcha. Yep. So we took some reports from that website, to find out where if everybody in this class of investors has 50 million, at the very minimum, where are they putting that $50 million per person, right. And so as suspected, real estate was the top number one, shocker, and private and public equities, were number two, and depending on the years that they studied. So Flip is going to have a graph if you're watching on YouTube, you're going to see the graph that Flip is holding up here, right now. And if you're listening to the podcast, sorry we’ll walk you through it here real quick. 

But we're just going to talk about the top three, which we just said. So in quarter three of 2020, to quarter two of 2021, the investment allocation was 27% of their money went into real estate, 22% went into private equity, and 25% went into public equity. So none of those numbers are very far off, but top three, then if you look at the quarter three of 2018, to quarter two of 2019, then you're going to see similar numbers still in the 20s. But real estate was then 28%, private equity was at 24%. And public equities was 21%. So that's like three quarters of this graph is between real estate, private equity and public equities. So we're going to talk about two of them specifically because well, because private versus public. The public’s hitting the stock market, you've got other additional risks involved in those types of things. So we're going to talk about why they invest in these. And it's because of the above market returns, right? We know that consistent consistency and the stable nature of real estate in general, especially multifamily, is very, very strong, and we get really high returns. Also, real estate is a hedge against inflation, then go to private equities. 

What is private equities? It's when you're investing in a private company. And the reason I separated private versus public equities is because private equities aren't on the stock market. So public equities are going to have the volatility that you might see in the stock market, because people who are unsophisticated investors who are investing in the stock market, and they're reacting based on emotions, when you're uncertain, you're very, very emotional, and you're fearful. And so you usually sweep up all your money. When that happens. That's when the market gets really volatile. So public equities is not something that Flip and I do a lot in, we certainly do a lot in private equities. 

But the wealthy, you can see that they even dip into the public equities. And I'm sure that they're also hedging, and doing things like in the food market, right? Everybody needs food, right? Despite inflation, people have to eat. And so investing in those types of equities might be a good idea. I just read an article about pets, and the pet industry that even during COVID it thrived. People, like us, we take care of our pets, our pets are like our children, and we're going to continue to spend money, even if prices start rising. We're going to continue to spend money. So that's another kind of recession proof type world, that I'm sure that if it's in the public equities, I bet they're investing in those but the private ones, they're not going to be as affected on the stock market, right? Because they're not public. And so they're not going to be affected by those swings. And as long as there's a track record of success, and they're following the demand, supply and demand and have the ability to hedge against inflation, that's where the wealthy are putting their money so that it's always interesting to watch. 

You always Flip and I always find where we want to go by looking at the people right? We say hey, you are where we want to go. What are you doing? Where are you investing? How are you doing? What have you built? How did you get there? What mistakes did you make? How do you wish you would have done it when you started? we ask all these questions because we want to get where that person is? Well, this is one of those examples of, hey, these guys are pretty wealthy, probably pretty intelligent about what they're doing. And they have their own little Secret Circle. Yep. What are they sharing with each other? Right? And they're all three quarters of their investments are in equities and real estate. Like that's telling. 

And I thought, I bet you more people would like to hear this because I found it really interesting. Not that's kind of what we do, too, right? It's always nice to go. Oh, hey, the ultra wealthy are doing it. That's right. We're on the right track. That's right. And so when you saw the Tiger 21 website, how did you put a date on when we're on there? Oh, I haven't yet. But that goal in mind that keeps on moving. It just got a little further away. 

Well, we hope that you enjoyed this episode, make sure you head on over to our website www.FreedomCapitalInvestments.com to join the Investor Club. 

But make sure we're also on Facebook and LinkedIn, all those we have special groups there. So make sure you're going over there to talk to the gang. Get your questions and let us know how we're doing and all that fun stuff. But hit the like button. Yeah, hit the like button if you want to invest like the ultra wealthy if you want to get Tiger Beat. I am going to have to Google it now. Magazine from the 80s with the teen magazine. Remember, Tiger Beat.

We always like to end all of our episodes with Invest Smart. Live Happy. Bye everybody. 

Disclaimer: Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on the show are not guaranteed. All investment strategies have the potential for profit or loss.

Transcribed by https://otter.ai