Secrets of the Ultra-Wealthy Investor

TruePoint Capital

The public has this perception that the wealthy are the doctors, lawyers, and athletes of the world. They don’t realize that many of these athletes go broke once they retire, and many of the doctors and lawyers living behind gated communities live paycheck to paycheck.

​​The reality is wealth has little to do with status or prestige.

​​Many ultra-wealthy live unassuming and modest lives that don’t draw attention, but that’s why they’re ultra-wealthy. They have different objectives and goals than everyone else. Most didn’t even start out ultra-wealthy. Many are college dropouts, teachers, and unassuming professionals who lead modest lives.

The difference between the unassuming school teacher and the doctor working paycheck to paycheck is what’s in the driveway and the balance of the bank accounts. The ultra-wealthy teacher and the struggling doctor are doing things differently. While the doctor wants his neighbors to see the Mercedes in the driveway, the teacher doesn’t have the same priority.

Here’s the reality:

Many people you assume to be rich (doctors, lawyers, CEOs, and entertainers) often spend their money on toys and on what can be seen from the curb – big houses and nice cars. They go into debt, playing the comparison game with their peers and amassing assets that only drain their bank accounts from upkeep and depreciation.

​​The ultra-wealthy, on the other hand, have other objectives. They don’t care what others think. They would instead acquire assets that grow their bank accounts vs. shrink them. They have different objectives and different habits.

Here are the secrets of the ultra-wealthy:

Their Goals Are Different…

While others may have as their prime objectives to have a big house, nice cars, country club memberships, and private school tuitions, the ultra-wealthy have different goals. They’re aiming for different ends. They may gain some of the other things like a nice house as a consequence, but that’s not their prime objective. They’re more interested in achieving financial freedom by cutting the cord with the time clock, spending more time with family, retiring early, seeing the world, and giving back to society. They know this can’t be accomplished through a 9-to-5 job. Financial freedom can only be achieved through passive income – income that can be generated 24-7 without the requirement for punching a time clock.

The ultra-wealthy implement different actions and habits for accomplishing those goals with different goals. That’s why they don’t depend on their day jobs for income and why they don’t go into bad debt to fuel expensive lifestyles.

They Invest Differently Than The Masses By Not Following The Crowd…

While the masses invest in what they’ve been conditioned to invest in or the latest hyped-up investment, the ultra-wealthy invest differently; the masses pin their hopes on appreciation (i.e., buy low and sell high). That’s why they’re drawn to stocks, crypto, ETFs, 401ks, and mutual funds.

​​Maybe the assets are ones their parents have told them to invest in (401ks and mutual funds), or the assets are ones social media is buzzing about (meme stocks, crypto, ETFs). All these assets have one thing in common – their returns rely entirely on the appreciation.

The wealthy don’t rely on timing and appreciation. They want a reliable passive income from assets that grow over time. Combined with tax benefits, this triple-threat of advantages arm the ultra-wealthy with a wealth creation machine that the public ignores. That’s why they’re drawn to assets like real estate and income-producing businesses.

They Expect Dips And Bear Markets…

The ultra-wealthy investor has a longer investment horizon than the average investor who looks at their investments with a daily view. That’s why the ultra-wealthy aren’t interested in the timing game. They know it’s a fool’s errand, and they also know that investing in the right assets with a long view iron out any temporary dips for sustained long-term growth insulated from volatility. They invest with a time horizon of usually a decade or more.

Building wealth is one thing; keeping it is another. That’s why the ultra-wealthy leave nothing to chance. In contrast, the rest of the market freaks out over inflation at 40-year highs; the ultra-wealthy shrug it off because they are always investing with recessions and inflations in mind. To sustain wealth, investing for the long-term in assets that generate income insulated from market volatility and inflation is the surest route.

The Basis Of Investment Is Income – Multiple Stream Of Income…

The ultra-wealthy understand that the key to financial independence – breaking the time-clock vicious cycle – is passive income. It’s getting your money to work for you instead of the other way around. Only through passive income – especially multiple streams – can individuals break away from their dependence on a job.

Most people can not physically work three jobs, so generating multiple income streams through multiple jobs is not feasible. On the other hand, multiple streams of passive income are different. Investing in multiple cash-flowing assets is the secret formula for growing income exponentially through compounding and maintaining wealth.

Doctors, lawyers, and entertainers who rely on their ability to work put themselves at risk for financial disaster if they can no longer perform their duties. Only with a passive income independent of their ability to work can they achieve true financial independence.

The ultra-wealthy who are still working do it because they like to work, not because they have to. They are never afraid of losing their jobs or work income because they have passive income that could sustain them even if they couldn’t work. If they lose one income stream due to a black swan event, like a recession, they have four or five other income streams to help them pay the bills, continue saving for retirement and avoid falling off track with their goals.

For passive income, the ultra-wealthy target two assets in particular more than any others – real estate and private income-producing businesses (i.e., private equity). The ultra-wealthy favor these two alternative assets because they offer income plus appreciation insulated from the crowds on Wall Street.

They Invest With Partners…

The ultra-wealthy have no problems deferring to the expertise of others. They understand that only through investing with partners can they generate multiple passive income streams. They don’t have the energy, brainpower, experience, or hours in the day to handle multiple cash-flowing assets. That’s why they partner – and that’s before considering the various tax benefits of investing through a partnership structure.

There’s nothing complicated about the secrets of the ultra-wealthy on investing and creating and sustaining wealth. The rest of the investing public doesn’t find enough excitement in sticking to what’s tried and true.

​​That’s fine with the ultra-wealthy. They’re content to stick with what works rather than follow the latest hype.