Ayushi Kushwaha from CEO World – Reports
Ultra High Net Worth Individuals (UHNWIs), or simply the super-wealthy, have a large chunk of resources at their disposal. It wasn’t easy to gain what they have now, and it took years for these individuals to be where they are. Whether they are self-made or heirs to the super-wealthy, there is no simple way to keep the money in place. Strategies are in place, tested from time to time, and lessons are gleaned from the results. But do you think it is always a success? Of course, not.
From a spectator’s point of view, the grass is greener on the other side. And honestly, it isn’t entirely wrong, but it isn’t entirely true either. These UHNWIs have to shoulder the burden of sustaining their juggernaut entrepreneurial projects. You will most likely find a list of don’ts that are almost biblical to their daily decision-making activities from their playbook. One domain within the same is investment strategies. UHNWs are picky about their investment projects and avoid a slew of missteps every time they pick one up. What are those investment mistakes these persons avoid? Let us read along.
1/ Limiting to the European Union and the United States
I don’t have to explain why these two are specifically mentioned. They house many of the world’s biggest and most voluminous stock markets. These stock markets are known for their robust institutional and regulatory measures, security, and competitiveness. Profit margins can turn into magical numbers if strategized right. But, these two regions do not represent the global stock market. In fact, there are emerging markets as gainful as these two. India, Hong Kong, Singapore, and the Philippines are witnessing a rampant increase in trade volumes, and investors are reaping benefits remarkably. UHNWIs know that these markets are full of possibilities–many of which can end up being celebratory.
2/ Never Plan For The Future
Many people will tell you that UHNWIs are risk-takers or gamblers. They throw out in the market every coin from their coffers. No. UHNWIs are not mindless investment junkies; they know the risks and how far they can take them. They understand the unpredictability of the markets and prepare for the worst beforehand. Before they start investing aggressively, they plan for the future. With clear short-term and long-term plans, they devise their investment strategies, invest a certain share of their money in the market, and set aside the rest for safekeeping. They have signed up for sensible YOLOs.
3/ Invest Only In Stocks and Bonds
We get fascinated by the grand stories of success in the stock market. Greed is a sin for a reason, and money is just the right food. Yes, stocks and bonds make money, in fact, lots. But, they are vulnerable to market variations. The fluctuations can go to extremes. Stock investment is not always an extravaganza. UHNWIs know this very well and invest considerably in tangible assets. Real estate, for instance, is an excellent investment choice. Many super-wealthy individuals have humongous properties at their disposal; they live off those properties and even commercialize them from time to time. Always have in your portfolio assets that are more resilient to market changes.
4/ Avoid Diversification
I guess the point is already made clear through the preceding pointers. But I will elaborate more on this. UHNWIs have massive portfolios of assets at their discretion, but they maintain their diversity. You can’t put all your money into one project and expect it to always perform up to your expectations. You need to have several diverse investment projects spread across assets so that other assets can cushion price fluctuations. Losses incurred in one can be compensated/balanced by gains in another.
5/ Not Seeking Professional Help
This hesitation to not seek professional help can turn things upside. Financial counsel is essential, especially when there are vast resources and little time in your hands. As your investments grow, your credentials grow. You may be flooded with too many investment options that can confuse you into making wrong decisions. UHNWIs always maintain an army of financial experts to guide them from time to time and ensure optimal utilization of their resources. Yes, they don’t come cheap but end up helping you make a good load of money.