Diversify like the 1%
While half of high net worth households’ capital is tied up in real estate, investments in stocks, bonds and alternative assets make up the rest.
Real estate
One of the more common themes among the well-to-do households surveyed is that a large percentage own real estate. Primary and secondary homes account for around one-third of the overall net worth of most wealthy households. Commercial property makes up another 14%.
So, adding those two asset classes together, it’s clear that investors who own real estate tend to generate much higher gains over time.
Some of that could be due to the forced savings effect that real estate provides. Being a relatively illiquid asset with high transaction costs, those who simply pay their mortgage down each and every month gain a pile of equity (assuming you don't refinance).
However, if you’re not already part of America’s richest class, purchasing investment property may seem out of reach.
Thankfully, platforms like Cityfunds allow you to invest in residential properties without having to drain your bank account to put a downpayment on a home.
The company allows investors to invest in diversified portfolios of owner-occupied homes.
In exchange for the cash, Cityfunds secures an interest in the home's future value. As the home value appreciates, so does the value of Cityfunds equity investment alongside the homeowner. You can get into the real estate market in growing cities like Denver, Austin, Nashville and Miami with as little as $500.
And your options aren’t limited to residential real estate. If you’re an accredited investor looking to take your portfolio to that next level and you’re looking to to invest a larger sum with potential for quarterly returns, then commercial real estate might be the option for you.
For instance, First National Realty Partners (FNRP) specializes in grocery-anchored retail property deals aimed at accredited investors.
FNRP has developed relationships with the nation’s largest essential-needs brands, including Kroger, Walmart and Whole Foods, and provides insights into the best properties both on and off-market.
Their team acts as the deal leader, providing expertise, doing the legwork and streamlining the process, while investors can passively collect distribution income. Their team offers white-glove service to investors, so you can easily engage with experts, explore available deals and easily make an allocation, all in one personalized portal on their secure platform.
Creative alternative assets
Households in the top 2% generally all have some form of alternative investment in their portfolio, with nearly three-quarters of all households surveyed owning some form of alternative asset.
Fine art is one investment that consistently outperforms the stock market in the long-run. In fact, according to a report in Fortune magazine, contemporary art outperformed the S&P 500 with a compound annual growth rate of 12.6% between 1995 and 2022.
Many investors consider it an asset reserved for the top 1%, but that’s no longer the case.
If you’re looking to diversify your portfolio in the fine art and collectibles market, Masterworks is a platform worth considering.
Masterworks is a top platform for retail and accredited investors to purchase fractional shares of artwork by iconic artists like Banksy and Basquiat.
Simply browse through their extensive portfolio and choose how many shares you’d like to buy of the works you like. When Masterworks sells a piece you’ve invested in, you get a return from any net proceeds. They take care of all the details, making elite art investments accessible and hassle-free.
But maybe you don’t want to limit yourself to one asset class when you can choose from a plethora of private-market opportunities.
Notably, Fundrise offers access to multiple alternative investment opportunities spanning real estate, private debt and venture capital — all in one convenient platform.
Fundrise manages over $7 billion in real estate assets alone, for a community of two million investors and counting. Their platform is an accessible way to diversify your portfolio, with the potential of yielding dividends every quarter.
To get started, all you have to do is share some details about yourself, along with your investing style and risk tolerance. Then, Fundrise will create a a portfolio of private assets that aligns with your goals.
