The uber wealthy live in a world that is vastly different from the average investor. With a total net worth of over $100 million, these individuals are considered centimillionaires and make up the 0.001% club. Globally, there are approximately 28,420 centimillionaires, with concentrations in cities like New York City, the Bay Area, Los Angeles, London, and Beijing. According to Kevin Teng, CEO of WRISE Wealth Management Singapore, these cities boast robust financial infrastructure, vibrant entrepreneurial ecosystems, and lucrative real estate markets, making them attractive destinations for the ultra-wealthy.
The ultra-wealthy are selective when it comes to investments, focusing on preserving their legacy and wealth. They tend to avoid get-rich-quick schemes, illiquid investments, publicly traded equities, and even cryptocurrencies. Instead, their portfolios often feature stable, high-quality real estate assets such as trophy Class A properties. Real estate investments typically represent 27% of their portfolios, according to Michael Sonnenfeldt, founder and chairman of Tiger 21.
Individuals with such wealth often have their money managed by single family offices, which take care of all aspects of their finances, including inheritance, household bills, credit cards, and immediate family expenses. These family offices may also have foundation arms for charities and venture capital arms that invest in high-growth startups. The number of family offices in the world has tripled since 2019, reaching over 4,500 worldwide with an estimated $6 trillion in assets under management.
Another investment avenue explored by ultra high net worth individuals is buying stakes in professional sports teams. This exclusive opportunity goes beyond just the financial aspect, as it allows wealthy individuals to mingle with others of similar status and legitimize their social standing. Owning a stake in a sports team, like an NFL team, is seen as a symbol of status and recognition. For example, American billionaire Jerry Jones was “knighted” in a sense when he purchased the Dallas Cowboys in 1989.
In addition to real estate and sports team ownership, the ultra-wealthy also pay attention to fixed income, private credit, and alternative investments. Private credit is gaining traction as investors seek unique risk-return profiles outside of traditional markets. Alternative investments can include venture capital, private equity, and real assets, reflecting a growing appetite for non-traditional assets among the ultra-wealthy.
The investing strategies of the ultra wealthy are tailored towards wealth preservation, exclusivity, and social status. These individuals prioritize stable, high-quality assets like real estate, explore unique investment opportunities like professional sports teams, and look for non-traditional assets with attractive risk-return profiles. Family offices play a crucial role in managing the finances of the ultra-wealthy, ensuring that their wealth is protected and their legacy is preserved for future generations.