See full version: 6 Investing Mistakes the Ultra Wealthy Don; t Make
In the words of Warren Buffett, the No. 1 investing rule is not to lose money. UHNWIs aren't mystics, and they don't harbor deep investing secrets. Instead, they know what simple investing blunders to avoid. Many of these mistakes are common knowledge, even among investors who are not particularly wealthy. Here is a list of the biggest investing errors UHNWIs avoid making. more
The ultra-wealthy, known as ultra-high-net-worth individuals (UHNWIs), make up a group of people who have net worths of at least $30 million. The net worth of these individuals consists of shares in private and public companies, real estate, and personal investments, such as art, airplanes, and cars.
Instead, UHNWIs understand the value of physical assets, and they allocate their money accordingly. Ultra-wealthy individuals invest in such assets as private and commercial real estate, land, gold, and even artwork. Real estate continues to be a popular asset class in their portfolios to balance out the volatility of stocks. While it's important to invest in these physical assets, they often scare away smaller investors because of the lack of liquidity and the higher investment price point.
When people with lower net worths look at these UHNWIs, many of them believe that the key to becoming ultra wealthy lies in some secret investment strategy. However, this isn't usually the case. Instead, UHNWIs understand the basics of having their money work for them and know how to take calculated risks.
The exact amount differs by financial institution and region but usually refers to people with a net wealth of seven figures or more. As noted above, people who fall into this category have more than $1 million in liquid assets, including cash and cash equivalents. These assets do not include things like personal assets and property such as primary residences, collectibles, and consumer durables.
Almost 63% of the world's HNWI population lives in the United States, Japan, Germany, and China, according to the Capgemini World Wealth Report. The U.S. had about 6.6 million HNWIs in 2020, up 11.3% from the year before. more
Their wealth allows high-net-worth individuals to take part in initial public offerings (IPOs) and invest in startups that demonstrate financial potential. more
On Forbes' ever-changing list, Amazon.com founder Jeff Bezos holds the top spot as of July 12, 2021. He is followed by Bernard Arnault, Elon Musk, Bill Gates, and Mark Zuckerberg, in that order. All except Arnault founded or co-founded their own companies. Only Musk and Zuckerberg remain CEOs of their companies. here
The U.S. is home to over a third of the world's UHNWIs—180,060. That's over two and a half times more than China, the country with the second-highest number (70,426), and more than all of the European countries combined at 151,665.
The number of billionaires in 2021, according to Forbes. here
Most UHNWIs do not have their money sitting in certificates of deposit (CDs), money market accounts, or mutual funds in a 401(k). Many ultra-high-net-worth individuals (49%) derive the majority of their wealth from owning their own businesses. Twenty-one percent get most of their wealth from their investment portfolios, and 14% get most of their wealth from their salary. [links]
Ultra-high-net-worth is generally quoted in terms of liquid assets over a certain figure. While $30 million is typically the gold standard, the exact amount can differ by financial institution and region. more
It’s true that ultra-high-net-worth individuals may have the advantage of being able to work with certain exclusive financial institutions but hitting that $30 million mark usually ends up being more of a status symbol and a statistic than anything else. If you’re considering a big investment or working with a specific financial institution, it may be a good idea to have a conversation to discuss any special treatment or terms that may come along with being an ultra-high-net-worth individual.
Remember that while most people and institutions consider ultra-high-net-worth individuals to be those with more than $30 million in net investable assets, the definition can change from situation to situation. However, regardless of the standard being used, the largest advantage of being an ultra-high-net-worth individual is the fact that you’re incredibly financially comfortable and you may have much more robust investment opportunities than your less wealthy counterparts.
There are some well-known names atop of the world’s list of ultra-high-net-worth individuals, including all of the world’s billionaires. Jeff Bezos, Bill Gates, Elon Musk, Mark Zuckerberg and Mackenzie Bezos are all ultra-high-net-worth individuals. Many billionaires and other ultra-high-net-worth individuals have earned their wealth through starting and owning businesses. Many of these ultra-high-net-worth individuals invest significantly in real estate. [links]
For help with your investing and financial planning questions, consider using SmartAsset’s free financial advisor matching tool .
According to The Wealth Report, published by Knight Frank in 2021, there are more than 520,000 ultra-high-net-worth individuals in the world, which is up a couple percent up from 2019. About a third of these individuals reside in the U.S. In fact, the U.S. houses more UHNWIs than any other country, including all of Europe combined. China has a large percentage of the world’s ultra-high-net-worth individuals too. Only about 15% of the world’s UHNWIs are women. [links]
It’s worth noting, however, that other studies have found different numbers of global ultra-high-net-worth individuals. For example, Barron’s reported a total of about 300,000 for 2020. [links]