What do the Wealthy Invest In? (Part 1)
Last week I discussed mindset. This week I’m jumping into the nuts and bolts. What do the wealthy actually invest in? Or actually today I’m going to focus on what they don’t invest in.
I work with the wealthy on a daily basis and they provide me with their financial statements. I’ve look at thousands of these over the course of my career and there are similarities from person to person that really can’t be ignored. And today I will talk about what they do not invest in which may surprise you. They do not have their money tied up in tax deferred vehicles like a 401k or IRA that they cannot access until they are ready to retire.
Even more surprising most of these wealthy people DON’T invest in the stock market. Out of their assets they may have 10-30% invested there. When I ask them why, I have gotten the same answer said in different ways. To summarize, they don’t understand the stock market. It goes up and down but no one, not a financial planner or a well-regarded economist can tell you what causes these fluctuations in the stock market. One day you could have $1000 the next day you could have ten.
There is NOTHING tangible that you own. You have a piece of paper that may have value one day and no value the next and your financial planner gets his fee no matter what the market does. Next week I will go into detail about what the wealthy actually do invest in.