Where Do Wealthy Americans Put Their Money Now?

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If only I were rich, I’d…

It’s fun imagining, right?

Here’s some of what Tevye of Fiddler on the Roof imagined:

“…If I were a… rich… man; I’d build a big, tall house with rooms by the dozen; Right in the middle of the town; A fine tin roof with real wooden floors below; There would be one long staircase just going up; And one even longer coming down; And one more leading nowhere, just for show…” – Tevye in Fiddler on the Roof

What would you do if you were rich? Where would you put your money?

There’s a Survey that Looked at Where the Wealthy Put Their Money…

A recent Chubb survey interviewed 650 Americans and 150 Canadians with an investable net worth ranging from $500k to over $50 million, with 3 in 4 having $5 million or more.

Below are some fascinating highlights.

Next Year, They’ll Spend More on These Things

Here are the areas where they plan to spend more in the coming year than they did last year:

• Real estate: 73 percent
• Entertainment: 65 percent
• Domestic travel: 48 percent
• Education: 45 percent
• Collectibles: 38 percent
• International travel: 34 percent
• Yachts or boats: 19 percent

Most plan to increase their spending on real estate and entertainment, with nearly half planning to spend more on education and domestic travel. More than 1 in 3 plan to spend more on international travel and collectibles.

Home Sweet Home

With real estate topping the list at 73 percent, here’s what those surveyed had to say about theirs…

More than 6 in 10 see their homes primarily as an investment, and the average home value in this group is over $6 million! For nearly as many, home means comfort and security. Given this, it’s not surprising that 43 percent are planning to remodel, renovate, or upgrade their homes.

About 3 in 10 already have smart technology in their homes, with 4 in 10 planning to install it in the coming year. The next highest was alternative energy sources (think solar panels, geothermal heating/cooling, etc.), with nearly 1 in 4 already having it in their homes and almost 3 in 10 planning to install such systems in the coming year.

About 30 percent already have a basement extension, with another 14 percent planning to add one. About 1 in 4 have a wine cellar, and another 13 percent plan to install one soon.

Primary residences are far from the only real estate owned by many of the wealthy, with 46 percent owning at least one other home, and 38 percent planning to buy more in the coming year.

Speaking of Collectibles…

More than 8 in 10 of these wealthy Americans (and Canadians) invest in collectibles. Most (more than 6 in 10) pursue it as a passion, while about 1 in 3 do this as an investment first and foremost.

The most popular collectibles among the wealthy are:

• Fine art (26 percent already own and 18 percent plan to acquire in the coming year)
• Jewelry and gems (22 percent own, 19 percent plan to acquire)
• Collector cars (22 percent, 13 percent)
• Watches (20 percent, 14 percent)
• Fine wine (19 percent, 20 percent)
• Designer accessories such as sneakers, bags, etc. (18 percent, 12 percent)
• Rare coins (16 percent, 6 percent)
• Stamps (13 percent, 5 percent)
• Sports memorabilia (12 percent, 11 percent)
• Non-fungible tokens or NFTs (10 percent, 7 percent)

Taking Personal Stock…

I thought it would be interesting to compare all the above to what I do, so here goes.

While I own real estate beyond just our home (and our home is worth nowhere near $6 million!), I don’t expect to invest more in this arena anytime soon, especially given the sky-high prices and high mortgage rates (which are even higher for investment properties).

We certainly plan to travel but having already gone overseas multiple times for work and leisure earlier this year, our travel for the remainder of the year will most likely be domestic.

We don’t own a yacht or boat (unless you count kayaks and standup paddleboards… :)) and won’t buy any of these in the future. We’re well aware of the semi-joking saying that the day you get your boat is the second happiest day of your life. The happiest day is when you get rid of it…

Yes, we’ll spend more on entertainment, but I doubt it will be a significant portion of our budget.

Education is an unlikely place for us to invest further money since we both have graduate degrees and our kids are all college grads.

While I dabble in some collectibles, these are more in the way of childhood collections than any serious investment of time and money.

Where Financial Advisors See the Wealthy Investing and Spending

I asked several financial pros where their wealthy clients invest and/or spend their money. Here are their answers.

Zack Swad, President of Swad Wealth Management says, “My clients primarily grew their wealth in one of three ways; creating lucrative businesses that helped them amass wealth, investing in real estate, and/or investing in stocks. What they all share is having saved and invested a significant amount throughout their lives.”

David Warshaw, President of The WealthPlan says, “Many of my clients are looking for alternative investments, such as private equity, private credit, real estate, DSTs, and digital assets.”

Arielle Tucker, founder of Connected Financial Planning agrees and expands, “In addition to real estate and collectibles, many of my clients increasingly consider alternative investments such as private equity and venture capital. These asset classes offer the potential for high returns and are attractive to those seeking to diversify beyond the stock market. Additionally, I see growing interest in aligning financial goals with personal values, leading to increased investments in sustainable and socially responsible companies.”

Andrew Van Alstyne, Wealth Manager, Fiduciary Financial Advisors shares, “Outside of traditional asset classes (and for that matter, alternative asset classes), many of the families I work with look to invest in themselves and their community. This is through taking care of educational needs, properly funding business ventures, and achieving philanthropic goals. Aside from that, they look to enjoy the fruits of their labor, whether that’s travel, recreational activities, and/or purchase of luxury collectibles.”

The Bottom Line

Even looking just at the responses of the wealthy, you can get the clear sense that “the wealthy” aren’t a monolithic group.

This is true in terms of net worth – you can be considered wealthy with $500k (assuming your expenses are modest). You can reach “high net worth” or HNW at $1 million to $5 million. From $5 million to $30 million you’d be considered “very high net worth” or VHNW. Once your wealth exceeds $30 million, you’re considered “ultra-high net worth” or UHNW.

And then there’s the “billionaire club” with a “membership” of nearly 2800. If you compare the wealthiest in the world to the lowest net worth that qualifies you as high net worth, that’s a ratio of 233,000 to 1! So being rich can mean vastly different things.

It’s also true regarding their hobbies and passions, as the above shows, with just over 1 in 4 collecting fine art, the highest fraction of any of the above-listed collectibles.

Finally, while they have a higher overlap in their investment assets (businesses, stocks, real estate, alternative assets, etc.), the majority who include their primary residence as an investment asset is far from an overwhelming majority, at just over 6 in 10.

About the Author

Opher Ganel, Ph.D.

My career has had many unpredictable twists and turns. A MSc in theoretical physics, PhD in experimental high-energy physics, postdoc in particle detector R&D, research position in experimental cosmic-ray physics (including a couple of visits to Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting NASA projects and programs. Along the way, I started other micro businesses and helped my wife start and grow her own Marriage and Family Therapy practice. Now, I use all these experiences to also offer financial strategy services to help independent professionals achieve their personal and business finance goals. Connect with me on my own site: OpherGanel.com and/or follow my Medium publication: medium.com/financial-strategy/.

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