With inflation still elevated, credit card debt rising, and housing costs skyrocketing over the past few years, many Americans are trying to hold onto the money they currently have and hopefully find a few ways to grow it.
That's why it's worth looking at what the ultra-wealthy are doing with their money right now. There's not tons of hard data out there on how billionaires manage their money. But a recent report from Capgemini Research, a global think tank, sheds some light on where high-net-worth individuals (HNWI) -- people with $1 million or more in financial assets -- keep their money.
Here are the top five places wealthy individuals invest their assets and a few suggestions for storing your money, no matter how much you have.
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1. Cash and cash equivalents
It might seem contrary to some people's assumptions about the wealthy, but the Capgemini report found that HNWI keep a large and growing portion of their assets in cash and cash equivalents, like short-term mutual funds or certificates of deposit.
The data shows that wealthy people have 34% of their assets in cash -- the largest percentage of all the asset allocation categories -- and that it's becoming an increasingly popular place to put it.
In the previous five years, just 25% of financial assets were kept in cash, but with interest rates rising and inflation up over the past few years, HNWI have opted for a less risky place to put their money.
You don't have to be rich to make a similar move with your money. Many banks currently offer high-yield savings accounts, making them an attractive option for safely growing your money.
2. Stocks
Not surprisingly, owning stocks is one of the main categories where millionaires and billionaires prefer to keep their money. The survey shows that 23% of wealthy people's money was in stocks.
Interestingly, HNWI have retreated from stocks slightly over the past year. Capgemini data showed that rich investors put 29% of their assets in stocks in 2022, before paring their allocation back this year.
The types of stocks they invest in have changed, from buying riskier technology stocks to owning more value stocks.
3. Real estate
Wealthy individuals currently have about 15% of their financial assets in real estate. That's roughly the same percentage the affluent have allocated to the financial segment over the past five years.
Rising mortgage interest rates are keeping many people from putting more into the real estate market. Collapsing commercial real estate values across the country will likely keep some investors away from that market as well.
4. Fixed income
Wealthy individuals put about 15% of their assets into fixed-income investments. These are stable investments, like bonds, that earn income over a set period of time.
For example, some bonds, like Series I Savings Bonds, pay 4.3% right now and pay out the interest every six months. Typically, you have to leave the money in the bond for at least one year and you'll receive an interest penalty if you try to cash it in before five years.
5. Alternative investments
The lowest allocation among high-net-worth individuals was for alternative investments, including digital assets like Bitcoin or commodities like gold and silver.
High-net-worth individuals may also have alternative investments that include venture capital endeavors, private equity investments, and art collections.
This category made up just 13% of a wealthy person's assets, but that's still up from 9% in 2018.
Where to put your money
You don't have to match the ultra wealthy when it comes to where you put your money, but you should have a strategy in place. For example, if you want to build your emergency fund and need a safe place, opening a high-yield savings account is a good choice.
On the other hand, shifting some money into a brokerage account where you can buy stocks may be best if you're trying to grow your assets. Fortunately, you don't need to be good at picking stocks to invest in the stock market. Choosing a low-cost index fund can be a great way to passively grow your money over time.
The important thing to remember is to have a plan in place for what you want to accomplish with your money, whether you have $1 million in financial assets or $1,000. If you're unsure where to get started, you may want to consider online robo-advisors, which have low fees, low minimum investment requirements, and can automatically reallocate your investments.
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