If you want to be rich (or financially independent), examine the investment strategies and thought patterns of the wealthy. You may be surprised by how similar they are. Below, we’ll list 5 investment strategies used by the wealthy and financially secure.
1. Diversify less.
Don’t leave yet – we believe in sensible diversification. Our investment advisors have preached to us hundreds of times about it. However, the wealthy know that the only way to make a lot of money is to take some risk. Although we don’t recommend the billionaire strategy of putting all your eggs in one basket, don’t be afraid to make one or two sizable investments that show promise while diversifying the rest of your portfolio.
2. Invest in illiquid assets.
No one ever got rich by holding cash. Wealthy people hold their assets underground (oil), in real estate, or in businesses. In fact, in interviews with wealthy businesspeople, many will comment that they don’t “feel” rich. That’s because the best way to protect and grow your wealth is to give it away, in a sense, investing it in illiquid assets and leaving yourself with relatively little cash. The only time very wealthy people or their families ever see large checking account balances is when they retire or pass away.
3. Sacrifice short-term gains for long-term ones.
The popular image of the wealthy investor who day trades and pushes papers around constantly was never based on reality. Rich people don’t see profit as a short-term thing; instead, they make long-term investments that will bring them huge windfalls all at once.
A favorite investment decision among the super-wealthy? You guessed it: land banking. Mary Fairfax, an Australian multimillionaire, is known for buying land on the outskirts of urban centers and waiting for it to reel it profit.
This strategy takes patience and discipline, but if you can change the way you see profit, seeing it as a long-term gain instead of a short-term incentive, you will multiply your wealth.
4. Serve growth industry leaders instead of competing with them.
You might not realize it, but within any growth boom, some of the wealthiest people are the suppliers, not the main players. Supplying resources to an energy company is easier and safer than trying to run one. Behind the scenes, the best way to build and protect a fortune is to supply something that all of the larger developers need.
5. Work is play.
This last point deviates a little from our investment theme, but it’s important. Wealthy people don’t work 40 hours a week – they allow their work and social lives to overlap. They enjoy themselves while they work and invest, and they also seek out moneymaking opportunities, even on their days off. Instead of leading two separate lives – one at work, and one outside of it – they build a lifestyle into which their work, investments, interests, and social gatherings all fit.
We hope you enjoy our blog. For personalized investment and land banking advice, give us a call or shoot us an email: we enjoy the conversation.