How do the richest in the world invest their money? : From stocks to art and crypto, the most chosen options

How do the richest people in the world invest their money? A key survey of millionaires reveals they invest their money in everything from office buildings to art to cryptocurrency.

Knight Frank’s 2023 “Wealth Report” details how the ultra-rich invest their money, Business Insider reported.

In this sense, it was explained that “stocks and participations are the assets that contribute the most, with 26% of the average portfolio of an ultra-high net worth individual (with more than 50 million USD) in variable income.

“About 5% of their portfolios go to passion investments, such as art, cars and wine,” he said.

Knight Frank interviewed over 500 private bankers, wealth advisers and family offices representing combined wealth of over $2.5 billion.

While the report estimates that the world’s richest people have lost more than $10 billion in total, it also shares insights into the composition of the elite’s financial portfolios.

“From vast art collections to cryptocurrency and NFTs, this is how the richest people in the world keep their money.”

“Each asset class represents a percentage of the average portfolio, with the total adding up to just over 100% thanks to rounding in the Knight Frank report,” he said.

26% of the investment portfolios of the world’s richest people are invested in stocks or stocks and shares of companies, according to the Knight Frank survey. In the United States, this proportion reaches one-third.

In 2022, “Berkshire Hathaway, owned by Warren Buffett, invested a record $68 billion in stocks as market value resurfaces,” the company said in its latest annual report.

Altogether, “commercial real estate accounts for more than stocks in high net worth portfolios, but the Knight Frank report breaks it down into direct and indirect investments.”

“21% of the average portfolio is invested directly in commercial real estate, while another 13% is invested through debt financing or real estate investment funds,” he said.

“43% of respondents say their clients are currently investing in offices – the most common type of commercial property – while healthcare is the most popular sector, with 35% representation,” he said. .

“57% of those questioned say that their customers are attentive that the property has an ecological source of energy”.

“Bonds have long been touted as a convenient way to invest money, so it’s no surprise that they make up 17% of the average UHNWI portfolio,” he said.

“A bond is actually a type of promissory note, usually issued by governments or corporations, in which the issuer is required to repay the holder their investment plus interest at a specified maturity date, which usually varies from ‘one year to 30 years’.

For example, he noted, “BlackRock, the world’s largest asset manager, recently said investors should invest in bonds as federal interest rates continue to rise.”

Private equity means investing in a company that is not yet publicly traded, and if it is venture capital, it implies that it is more risky, “but the company has growth potential pupil”.

“And the richest people in the world allocate an average of 9% of their portfolio to this type of investment.”

On ABC’s “Shark Tank,” entrepreneurs compete for private equity investments, but venture capital can also mean helping start new businesses.

“Peter Thiel was Facebook’s first angel investor in 2004, growing his initial $500,000 to $638 million when the company went public eight years later.”

Passionate investments are things like art, cars, and wine that can be bought for fun or just as an investment. They represent approximately 5% of the average portfolio.

59% of people surveyed by Knight Frank said their customers are likely to buy art this year. “Watches and wine were the other most popular products, while around a third expected their customers to buy classic cars. According to the survey, 20% are interested in luxury handbags.

In 2017, Leonardo da Vinci’s “Salvator Mundi” became the most expensive painting ever sold, at $450.3 million.

“The richest people in the world keep 3% of their investments in gold. In fact, they consider it the second safest purchase after real estate”.

Financial analyst James Jason of commodity trading platform Mitrade told Business Insider: “History has shown that during economic downturns, from the Great Depression to the COVID-19 pandemic, gold takes the value.” .

After Russia invaded Ukraine last February, demand for gold bullion and coins in the country grew almost fivefold in 2022 compared to the previous year, according to the World Gold Council.

“The world’s richest people consider cryptocurrencies to be the most volatile investment, yet they still make up 2% of the average portfolio. In last year’s report, Knight Frank said 18% of UHNWIs owned some form of cryptocurrency.”

“And while 34% still think the NFT market has a lot of potential, 20% changed their minds after the crypto crash.”

Following the dramatic implosion of crypto exchange FTX last November, “regulators around the world have started talking about how to better protect investors.”

The Knight Frank survey also lists “other” investments, which make up 7% of the average portfolio, but does not specify what this category includes.

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