Invest Like the 1% — Expert Tips You Can Use No Matter Your Net Worth
Written by
Cynthia Measom
Edited by
Amber Barkley
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You might think that investing like the wealthy is a luxury reserved for those with prodigious bank balances. However, even if you’re not part of the 1%, you can still adopt their investment strategies. Smart investing isn’t about how much you have; it’s more about how you use it.
What Does It Take To Invest Like the 1%?
To find out what sets the wealthiest apart when it comes to investing, there’s no better resource than experts who have firsthand experience with them. And it seems like these experts all have the same advice.
Michael Wagner, co-founder and COO at Omnia Family Wealth, said, “The biggest difference with the 1% is what they have access to, but they are using that access to further diversify their portfolio, so I would urge anyone to think about diversification.”
James Allen, founder, CPA, CFP and CFEI at Billpin, said, “The wealthy don’t have a secret playbook for investing; they simply understand that the road to financial prosperity isn’t paved with high-risk gambles or flashy hot stocks. Instead, it’s built on the bedrock of steady, consistent investing in a diversified portfolio.”
Scott Lieberman, founder of Touchdown Money, said that his No. 1 tip is to diversify, diversify, diversify. “If you’re a homeowner, you might have a lot of your wealth tied up in your house — and that’s okay. There’s often no way around it. But still, do everything you can to diversify as you pay off your mortgage.”
Ways To Diversify
Even if your net worth pales in comparison to the 1%, that doesn’t mean you can’t make headway when it comes to your financial goals. Here are ways to diversify — straight from the experts.
Low-Cost Index Funds
“One of the most accessible strategies is investing in low-cost index funds, a favorite of Warren Buffett himself,” said Allen. “Index funds offer a way to invest in a broad swath of the market, providing diversification and reducing risk. They’re like a slow cooker for your finances — you set it, forget it and let the magic of compounding do its work.”
Dollar-Cost Averaging
“Another strategy is dollar-cost averaging,” Allen said, “which involves investing a fixed amount of money at regular intervals, regardless of the market’s performance. This approach takes emotion out of the equation, prevents knee-jerk reactions to market fluctuations and, over time, can yield substantial returns.”
Real Estate-Focused ETFs
“It’s true that you might not be able to afford a down payment or an entire piece of real estate, but there are ETFs out there that allow you to access the real estate market overall,” advised Wagner. “There has been a growing trend to democratize alternative assets, so we’re seeing a lot of strategies that were once exclusive to qualified purchases now available in formats like mutual funds and ETFs.
“It’s important to remember that there are limitations to using a more liquid vehicle to access a strategy that is usually used in a less liquid way, but I think this is a close approximation. It’s easier than ever for people to use strategies like investing in real assets like real estate, metals and commodities through things like ETFs.”
Real Estate Investment Trusts
Sebastian Jania, director at Ontario Property Buyers, said, “While many of the rich do own real estate, many of them also invest in companies that own real estate, such as a REIT. By purchasing shares of a REIT, one is able to get exposure to the real estate market with a very small amount of money per share compared to the amount of money that one would need for a down payment.”
Self-Development
“People will often find that the top 1% say that the best investment is into oneself,” said Jania. “The reason for this is that investing in oneself allows oneself to improve one’s skills, which ultimately results in the potential for increased income. This income can then be used for further wealth generation through investments.”
Allen also believes that educating yourself is of great value.
“The wealthy understand the importance of financial education,” he said. “They invest time in learning about market trends, financial news and economic indicators. Today, with a wealth of information available online, anyone can become a self-taught financial expert.”
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