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Five Strategies from the Ultra Wealthy that Anyone can use

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Life can be complicated; kids need to be shuttled to practice, deadlines at work, cramming in some exercise class, and of course, saving for retirement. If you worry you aren’t on the right track, you may find some help in an unlikely place: the very rich. There are some strategies that are practiced by the Ultra-Wealthy that may be worth implementing in your own investing, albeit at a smaller scale. These techniques do not have a pre-requisite of $30 million dollars (which is the minimum cap to fit the designation Ultra-Wealthy aka UHNWI)[i] but can be used by anyone who wants to up their investing game and avoid some of the pitfalls. The majority of the high net worth individuals (with a net worth between $1 million and $30 million) are self-made and 40% of them live in the United States.[ii] Knowing that so many of them built their wealth from the ground up should be encouraging. Below we will go over 5 investing habits practiced by the ultra-wealthy that can up your game and ideally, also your returns.

Rebalancing Your Portfolio as Needed

While a strategic, diverse portfolio should do most of the work for you, even items in a crockpot need to be checked occasionally. Checking and rebalancing your portfolio is essential to keeping track and on top of your investment strategies. Financial experts suggest an annual review of all of your investments. Rebalancing can redirect investments that are lagging and not meeting their goals into new investments. This could also be a time to sell off some outperforming assets and reinvesting. Of course, you must be mindful of fees and taxes and factor that into deciding whether to reconfigure your investments.

Have a Savings Strategy

While a lot of investing is tied up in growth markets, having overall savings strategies that provide you with emergency expense coverage and liquid assets is also important. Investing is one part, but savings is the other. Interviews with self-made millionaires showed the majority lived below their means and socked away more than average into savings.[iii] Making frugal choices is a way of maintaining and growing wealth after all. Buying practical, quality items, and making sound financial choices across the board is a good rule for just about anyone, regardless of their bank balance. Paying down outstanding debts is another important saving strategy, as debt with compounding interest will eat away at anything saved. The trick to building wealth is to create a gap between earning and spending for years.

Invest Outside the Public Market and Intangible Assets

The Ultra-Wealthy also invest in more than the traditional areas of stocks, bonds, and IRAs. Spreading their investments into real estate, be it private or commercial, land, gold, and valuable items like artwork. These tangible investments can weather the volatility of the markets. These types of investments are often intimidating to new or lower-tier investors, but are seen as an essential part of a UHNWI portfolio and investment strategy. THE UHNWI also invest outside the public markets, putting money into private markets, and/or acting as angel investors. Private equity large university endowments, pension plans, and family offices. While private equity firms are quite expensive, often ranging in the $250,000-$25 million areas, they have the potential to make investors a lot of money.[iv]

Explore Investing Outside of the US and EU

Did you know that Hong Kong overtook New York City to become the world’s largest population of UHNWI? Asia overall saw a 27% increase in ultra-wealth in 2018.[v] Ultra-Wealthy people know to look outside their own backyard and see what markets are growing all over the world. Investing internationally does take a little more homework but there is real potential to open up and diversify your portfolio. The easiest and most popular way to invest is to buy ETF (exchange-traded funds) or mutual funds that hold some foreign holdings. There are various types of these two funds: international funds which will allow investors to access a broad variety, regional funds that focus on a certain area like the Middle East, country funds, or sector funds which focus on a certain sector across the world like oil, energy, or gold.

  1. Avoid Keeping Up with the Joneses

At the end of the day, the best way to hold and build wealth is to not spend it. Many Americans live beyond their means, regardless of their tax bracket, 21% have more credit card debt than savings.[vi] The solution? Live within your means and maybe downsize a little if you need to, especially if the urge for a flashy car or nice purse is to compete and compare with your neighbors. The more you can save and invest and reinvest, the better you will be in the long run. The truth is, unless you are looking over their shoulder at bank statements, you will never know what those around you are actually working with. Better to focus on your investment goals and your future. Do your research and make good, economic choices. Make long term financial plans, set goals, and recruit professionals to help you reach them. You may not drive the fanciest car now, but, with good saving and investing strategy, you may be able to buy yourself one down the line.

Happy Investing! Don't hesitate to contact us for a complimentary consultation to discuss your current investing strategy.


[i] https://www.wealthx.com/report/world-ultra-wealth-report-2018/?utm_campaign=wuwr-2018&utm_source=broadcast&utm_medium=referral&utm_term=wuwr-2018-press&utm_source=broadcast&utm_medium=referral

[ii] https://www.cnn.com/2019/01/16/success/world-wealth/index.html

[iii] https://www.businessinsider.com/how-millionaires-manage-money-interviews-2018-12

[iv] https://www.investopedia.com/articles/mutualfund/07/private_equity.asp

[v] https://www.businessinsider.com/hong-kong-has-more-rich-people-than-new-york-city-2018-9

[vi] https://www.marketwatch.com/story/a-growing-number-of-americans-have-more-credit-card-debt-than-savings-2019-02-13

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About the Author

Michael Fickell

Michael Fickell

As co-founder and Chief Investment Officer, Mike brings real-time investment management experience to clients. Prior to forming FC Wealth Solutions, he spent 15 years working on Wall Street as a trader and portfolio manager for some of the industry’s most well-known firms. His previous experience at Morgan Stanley, Royal Bank of Canada and Hutchin Hill Capital gave his valuable experience in institutional money management. His focus on continual research helps him identify macro trends and strategic investments for client portfolios. His research has enabled him to develop many of the rule-based investment strategies the firm uses for managing client assets and monitoring the markets.

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