Have you ever thought about what the super-rich do with their billions? It can be a mind-boggling question, but contrary to what you might think, the bulk of their fortune is not stagnating in a savings account. Besides acquiring wealth, billionaires gradually build it over time. To that end, they make successful investments and utilize several asset management techniques to preserve their wealth. Below are some of their most common investments.
Billionaires invest in commodities to increase their wealth, particularly when inflation causes an increase in market prices. Investing in commodities is wise because people and economies depend on them, especially when inflation makes them worth more money. Investing in raw materials like precious metals or industrial and agricultural products like natural gas, corn, coffee, soybeans, and more, can protect their wealth and assets.
Keeping their money and holding its value in another foreign currency allows billionaires to capitalize on fluctuations in the value of foreign currencies. Instead of keeping all their money in one currency, spreading their wealth assets in other currencies allows the rich to take advantage of capital appreciation, especially if another currency in which they have money gains value. It also offers them protection when the value of another currency falls drastically.
Investing in real estate has long been a popular technique used by billionaires to keep their wealth intact. Buying several properties is a valuable way of getting more money. After all, real estate properties can be rented or leased to businesses and individuals, providing a steady stream of income. Another advantage of investing in real estate is its reselling value can increase over time. When the value of the property depreciates, it can be deducted from its taxes.
Stocks and Mutual Funds
Investing in the stock market is an effective way to accumulate wealth; nevertheless, it can also be tricky for many billionaires because money can easily be lost in the stock market. That’s why billionaires make diversified investments in various companies, industries, and sectors. In doing so, they ensure that they do not have all their money tied up in stocks or are forced to liquidate their assets if they lose their shares.
Private Equity Funds
Private equity funds work uniquely by collecting money from investors and lending it to start-ups and companies. When investing in a private equity fund, billionaires carefully study the potential of the companies that invest in an equity fund and make sure that they make an informed decision before investing.
Cryptocurrencies are digital currencies; even though they are gaining popularity, many billionaires are wary of investing in them. Unlike other currencies, the advantage of investing in cryptocurrencies is that the money cannot be taxed, lost, or confiscated. Cryptocurrencies allow for secure storage of value; they can be used globally without worrying about exchange rates. Because of their digital value, these currencies make it easier to pay for products in other countries and move money without wire fees.
When looking for ways to preserve their wealth, billionaires turn the value of their money into tangible collectible investments. They collect anything and everything from vintage cars, art pieces, antiques, rare musical instruments, jewellery, and original manuscripts of well-known books. Such investments allow them to protect their money. Nevertheless, they must have a discerning eye for the products they purchase to avoid becoming emotionally invested.
David Messiha | Staff Writer