6 investing mistakes that the super rich never make

The super-rich are those with a personal net worth of at least $30 million. These assets include shares in private and public companies, real estate, and personal investments such as artwork, airplanes, and cars.

When people with lower net worth look at super rich, they often think that the key to making them so rich must lie in some secret investment strategy. However, not necessarily, the super rich also know the basic principles of money making money and ways to control risk.

According to billionaire investor Warren Buffett’s advice, the number 1 investment rule is don’t lose money. The super-rich aren’t gods, and they don’t have any investment secrets. Instead, they know how to avoid simple mistakes in investing. Many of them consider this as basic knowledge.

Here are the biggest investing mistakes the super-rich never make.

Mistake 1: Only invest in US and EU markets

While many see developed countries like the US and EU as the safest places to invest, the super-rich look more broadly to other emerging markets. Some of the top countries where the super rich are investing are Indonesia, Chile, and Singapore. Of course, individual investors should research emerging markets and decide if this is right for their portfolio and investment strategy.

Mistake 2: Only invest in intangibles

When thinking about investments and investment strategies, stocks and bonds often come to mind. Even if it is due to higher liquidity and lower initial investment value, it does not mean that those investments are always the best.

Instead, the super-rich understand the value of physical assets, and they allocate money accordingly. The super rich often invest in assets such as commercial or private real estate, land, gold and even works of art.

Real estate continues to be a popular asset class in their portfolios to balance out the volatility of stocks. While investing in these physical assets is important, they often scare off smaller investors due to their lack of liquidity and higher investment value.

However, according to the super-rich, owning illiquid assets, especially those that have nothing to do with the market, is beneficial for any portfolio. Those assets are not as volatile as the market and have a higher value over the long term.

Mistake 3: Allocating 100% of investment capital to the public market

The super-rich understand that real wealth is created in the private markets rather than the public markets. The super-rich can make a lot of money investing in private businesses, often through owning businesses or as angel investors in private equity.

Mistake 4: Getting caught up in the competition

Many smaller investors are always watching what the competition is doing and trying to match or beat their investment strategies. However, not falling into this kind of competition is also an important way to build wealth for yourself.

The super-rich know this well, and they establish personal investment goals and long-term investment strategies before making investment decisions. They envision where they want to be in 10 years, 20 years or more. And they will stick to the investment strategy to achieve that goal. Thus, they remain on track instead of trying to chase competition or fear when the economy falls into an inevitable recession.

Another thing, the super rich often avoid comparing their wealth with other individuals. They won’t buy a Lexus because their neighbor buys it, too. Instead, they invest the money they have to make a profit. Until they achieve the wealth they want, they can buy anything they want.

Mistake 5: Failing to rebalance a personal portfolio

Financial literacy is a big deal in the US, but people also need to understand how to rebalance a portfolio. Through this, investors can ensure a diversified and properly distributed investment portfolio. However, even when some investors have specific allocation goals, they often fail to rebalance, causing portfolios to swerve.

For the super-rich, rebalancing is a necessity. They can do this on a monthly, weekly, or even daily basis, but in short all the super-rich rebalance their portfolios on a regular basis. For those who don’t have time to rebalance or don’t have the money to hire someone to do this, they can set equalization parameters with investment firms based on asset prices.

Mistake 6: Ignoring a savings strategy

Investing is essential to becoming super rich, but many people forget the importance of a savings strategy. The super-rich understand that financial planning is a dual strategy, which is to invest and save wisely.

As a result, the super-rich can focus on increasing their inflows as well as reducing their outflows, thereby increasing their overall wealth. While not all the super-rich are known for being frugal, they know that living below can help them achieve their desired level of wealth in a short time.

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