Considerations for Those With $10 Million or More in Investable Assets
While basic investing tips, such as maintaining a diversified portfolio, apply to everyone regardless of net worth, the following investing strategies are particularly important for high net worth (HNW) investors.
#1 – Consider expanding your investments overseas.
Developed countries such as the United States and those in Europe have historically provided the most security and are suitable for a wide range of investors. However, it often makes sense for HNW investors to consider further diversifying their portfolios by allocating assets to less-developed markets too. Frontier and emerging markets include opportunities in countries such as Brazil, Malaysia, Morocco, Indonesia and Chile. Your wealth manager can help you evaluate options that are complementary to your overall investment portfolio and make sense for your personal financial situation.
#2 – Regularly rebalance your portfolio.
HNW investors should not overlook the importance of regular rebalancing. Rebalancing is the process of selling off a portion of your outperforming assets in order to reinvest into those that are lower performing. While this may seem counterintuitive, it helps prevent your portfolio from drifting too far from its target allocations. This is an important component of risk management within your portfolio, preventing one asset class from becoming too heavily concentrated.
#3 – Plan for risk.
HNW investors typically have a greater ability to endure volatility, yet it’s important to set risk parameters that you’re comfortable with. Allow your wealth manager to help you develop a risk management strategy and stick to it. This might mean establishing a defined level of diversification across equities, fixed income, alternative investments and tangible assets, such as real estate. It may also mean developing a glide path to help weather short-term losses. By having a plan in place to mitigate portfolio risk, you’re better able to remain focused on your long-term objectives.
#4 – Don’t forget to save.
Regardless of your net worth, it’s important to live below your means and save for the future. While you may no longer need to worry about having enough funds to cover an emergency, saving allows you to provide a more secure future for your loved ones and build your wealth more quickly than investing alone.
#5 – Give to charity.
There are multiple benefits of making charitable donations, the most important of which is to benefit a cause that matters to you. An added bonus of contributing to charity is the associated tax benefit. There are several tax-efficient ways to donate to charities. Your wealth manager can help you determine the approach that makes the most sense based on your particular goals and financial situation. A few of these options include:
- A direct gift of cash or appreciated securities
- Giving through a donor-advised fund (DAF)
- Giving through a family foundation
- A gift to a charitable trust
At Creative Planning, our teams have significant experience helping HNW individuals and families plan for their financial future. For more information about HNW investment strategies, or for help with any other financial matter, schedule a call with a member of our team.
