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How do rich people invest their money?

Avatar Written by Saadia Iqbal ·  2 min read >

When you have little money to invest, you either buy a mutual fund, a stock or you simply blow it on a new tech gadget. You may have wondered how the rich spend their money (I know I have) but have you ever thought about how they invest it?

There are lots of lessons we should learn from the rich folks and investing money is one of them. These folks always think about the future and that’s exactly why they are on the lookout for new investment opportunities. They are pretty clever in spotting ways to increase their wealth, you know. Plus, they always listen even if they don’t like a particular investment idea.

Don’t have millions to invest, no worries. Learning a thing or two about how the rich reap returns out of their money wouldn’t be a nice piece of knowledge to hold on to. Who knows this information comes handy in future. So, let’s see where they invest their money.

Real estate

Rich folks have a hunger for real estate. They invest their money in huge pieces of property. Some pool their money with others and buy commercial properties, while others just purchase pricey condos in global locales. They buy 2 to 3 mansions or villas in different places around the world. They live in them when they travel and once the time is right, they sell them. Some don’t even mind renting their property.

Pricey passions

Now we all know rich people have really expensive passions. They like buying expensive watches, flash cars, boats, art, wine, gems, jewelry, and musical instruments. Some riches buy them for use but others just buy them to look at. A smart move is to find something that’s rare so that they can get solid returns in future when it’s time to sell them at an auction. You will be surprised to see that as per the World Wealth Report, high-net-worth investors like to allocate the biggest chunk of their money to such ‘passion investments’.

Buy more business, of course

The rich never stop investing their money in business. It’s always lucrative. That’s why most celebrities run their businesses even though they have pretty successful acting careers. Some rich folks are even ready to invest in startups. Since they have networks, it’s easy for them to get the startup all the help it needs. It’s even easier than running their own businesses as all they have to do is meet the founders from time to time, get a first-hand look at what’s going on and just see the business grow.

Stock investments

How can we forget stock investments? Instead of running a business, Warren Buffet has devoted his entire life to pick the best stock investments. And he is pretty successful as according to Forbes, he is the world’s third richest man. Buffet hold stocks in Coca Cola, Proctor & Gamble, IBM, Business Wire, American Express and more. Yes, the stock market can get volatile at times but you can take it as an opportunity to buy a stock at a low price and sell it at a high price. Also, you don’t really need a large pile of cash for stock investment.

They follow tax strategies

Do you know that famous investors like Mitt Romney and Warren Buffet pay less in taxes than their secretaries? That’s because in the USA, long-term capital gains are taxed at 20% or maybe even lower. Anyone, who is working hard to earn even a single Rupee but is getting taxed more than 20%, is working too way too hard.

It has been observed that young people shy away from investing. To be honest, this is the right age for you to invest the money you have in hand and see it grow. Take inspiration from the rich. Don’t rush, start one day at a time.