Contrary to popular belief, high-net-worth individuals often invest their money in popular channels that are accessible to any investor, such as stocks, mutual funds, retirement accounts, and real estate.
However, there are also investment options that are less accessible to many people, mainly because they require a large amount of capital or need to review financial conditions before participating.
The following are some of the most popular investment options for millionaires:
Cash and cash equivalents
Many millionaires hold a significant amount of assets in the form of cash or highly liquid cash equivalents as a portfolio insurance against any market downturn. Cash equivalents are financial instruments with near-cash liquidity, such as money market funds, certificates of deposit, commercial paper, and treasury bills.
Real estate investing is a popular way for millionaires to profit from their assets. They often have large real estate portfolios and receive attractive deals from real estate agents due to their established presence in the market.
Many millionaires invest in stocks to seek passive income and diversification. Some may also hold controlling interests in one or more large companies or invest in dividend-paying stocks.
Private equity and hedge funds
Millionaires may also invest in private equity funds that specialize in investing capital in private businesses or public companies and turning them into private companies. Hedge funds invest in various financial markets to earn superior short-term returns.
Some millionaires invest in tangible assets, such as gold, silver, and minerals, or in intangible assets such as intellectual property rights to songs or movies, which can be very lucrative investments.
Investment in passion
Some millionaires also invest in their passions, such as art, fashion, antiques, or expensive musical instruments.
Overall, while millionaires may have some investment options that are less accessible to many people, they still invest in popular channels accessible to any investor.