To be clear, billionaires are not avoiding investing in stocks by any means, but you may be under the impression that Wall Street is the primary way they grow their wealth. Though the richest 1% of people hold an estimated 43% of the global financial assets in the world and have plenty of options to diversify outside of the stock market, there are a few other areas where their money is concentrated.
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The world’s financial elite have been diversifying their portfolios in ways that go far beyond the traditional routes. Here’s a closer look at some surprising investment trends among the 1%.
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Alternative Assets Are Essential
Art and luxury collectibles, such as cars and airplanes, have long been considered alternative investments for the ultra-wealthy, but the market for rare items has expanded dramatically. Wealthy investors are pouring millions into acquiring rare paintings, vintage cars and one-of-a-kind memorabilia as if adding things to a grocery list.
The underlying strategy for these luxury items seems to rely on them appreciating over time, sometimes providing better returns than stocks. With global uncertainty, investors find comfort in tangible and unique assets that can hold or increase their value during volatile markets. Here are some examples of rich collections.
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François Pinault: He has over 2,500 works in his art collection, featuring pieces by Mark Rothko, Jeff Koons, Damien Hirst and more. His collection is valued at around $1.4 billion.
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Ralph Lauren: He has a rare and vintage car collection worth around $600 million.
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David Geffen: His collection is estimated to be worth a whopping $2.3 billion.
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Hot (Climate) Commodities
The commodities billionaires invest in vary, and though some things like gold or silver seemingly never go out of style, sustainability, food safety and agriculture are areas that seem to be growing in interest for the uber-rich. Farmland is not only a hedge against inflation but also a bet on the increasing global demand for food as populations grow.
Sustainable farming practices, organic agriculture and even regenerative farming are becoming focal points for the wealthy who want to profit while promoting environmental stewardship. Some billionaires, like Bill Gates, have made headlines for their significant investments in agriculture, and this trend is not likely to slow down.
Some Investments Are Out of This World
When Jeff Bezos and Elon Musk made their notoriously famous forays into the space race, many viewed their ventures as personal passions. However, private space exploration is rapidly becoming a new frontier for investment. The wealthy are backing projects related to space travel, satellite technology and even potentially asteroid mining for rare minerals.
Space-based industries are expected to be worth trillions of dollars in the coming decades as new technological advancements make space travel more accessible and commercially viable. The 1% are seeing space not just as an adventure but as a highly profitable investment opportunity.
Realistic Real Estate vs. Virtual Real Estate
Yes, for big spenders, it often still comes down to location, location, location. The housing market has gotten out of hand for your average buyer, but billionaires often throw their money into homes and other properties. Here are some examples of extravagant lodgings.
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Ellison Estate: Located in Woodside, California, and owned by Larry Ellison, this property was an estimated $200 million investment.
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Xanadu 2.0: Bill Gates knows his way around an investment, and this property of his has a market value of about $130 million.
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Antilia in Mumbai, India: This 27-story, 400,000-square-foot skyscraper is owned by Mukesh Ambani and is estimated to be worth nearly $2 billion.
On the other hand, the rise of the metaverse is opening up entirely new markets, particularly in virtual real estate. Imagine owning land in a digital world where people can socialize, work or even trade.
Major brands are starting to establish a presence in these digital environments. As more people spend time in virtual worlds, though still in its early stages, this industry represents an untapped opportunity for savvy investors to claim their stakes in what could be the future of the internet.
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The bottom line is that while traditional investments like stocks and bonds will always be part of the wealthy’s portfolio, the 1% are increasingly looking toward innovative and sometimes surprising assets to grow and preserve their fortunes.
From rare collectibles to farmland, the 1% are adapting by investing in assets that reflect the future’s biggest opportunities — and challenges.
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This article originally appeared on GOBankingRates.com: You’ll Never Guess What the 1% Is Investing In Now — Hint, It’s Not Just Stocks
