What Do Billionaires Invest In The Most?

What Do Billionaires Invest In The Most?  Billionaires have virtually unlimited options when it comes to how they invest their wealth. They can focus on continuing to grow their wealth, or they can use their money to pursue their interests – some profitable, others not.

For example, Elon Musk (net worth $184.8 billion) is the second-richest person in the world and the richest person in the United States. While there is some variety in Elon Musk’s portfolio, his biggest investments are related to passion projects – Tesla, SpaceX, and Twitter. Musk’s Tesla stock is valued at more than $84 billion – and that’s after he sold a large amount to buy Twitter.

Jeff Bezos, the founder of Amazon and third-richest man in the world, has most of his wealth in Amazon stock. He owns ten percent of the nearly $1 trillion company. Larry Ellison, co-founder, chairman, and Chief Technology Officer of Oracle, has the majority of his fortune in Oracle stock. The company’s success made him the fourth-richest man in the world.

Finally, Warren Buffett, the fifth-richest man in the world, has invested the lion’s share of his wealth into his holding company, Berkshire Hathaway. The difference between Buffett’s investment and that of his wealthy peers is that Berkshire Hathaway’s primary function is investing. The other companies are tech pioneers that continue to lead the way in innovative products and services that enhance digital capabilities.

In short, when it comes down to what billionaires invest in the most, the most accurate answer is their own companies. However, they still have billions more that they need to put somewhere. That leads to a critical question: where do they park those funds? What assets do wealthy people buy?

What Assets Do Wealthy People Buy?

Outside of the billions they put into their own companies, billionaires develop comprehensive wealth management plans that include an array of common assets as well as some alternative choices.

The massive amount of money that needs to be invested presents a series of challenges. How do billionaires balance their massive portfolios? What assets do they choose, and what do billionaires invest in the most?

Stock Market

It goes without saying that billionaires have money in the stock market, and a portion of their portfolios are made up of the same types of companies that can be found in the average retail investor’s portfolio.

Billionaires have positions in energy, consumer staples, technology, and so on – the biggest difference is that their positions are massive. They appreciate the importance of stable, reliable stocks that can offer steady growth and, in some cases, large dividends.

However, billionaires have the resources to collect in-depth information and analysis on assets that are less familiar and more risky than well-known blue chips. They have the data and the funds to invest in IPOs, buy stock in emerging markets, and gamble on promising startups in ways that other investors can’t match.

For example, Warren Buffett’s Berkshire Hathaway has a large position in China’s leading electric vehicle company, BYD, which is not listed on any US exchanges.

Under Buffett’s direction, there is also a large investment in the Brazilian fintech company Nu Holdings, and Berkshire Hathaway participated in the Snowflake IPO.

Private Equity Investments

IPOs or initial public offerings are exciting for investors because, for most people, it marks the first opportunity to buy shares in promising new companies. However, billionaires have the funds and the connections to invest in up-and-coming companies that have potential to become the next Apple or Amazon before they go public.

These investments come with significant risk, but the rewards can be substantial. For example, when DoorDash and Bumble went public in 2021, their founders became billionaires, and the billionaires who invested pre-IPO added huge amounts to their fortunes. On the other hand, billionaires who invested in the healthtech startup Theranos lost everything when it turned out that Theranos wasn’t able to deliver on its promises.

Commodities

Investing in commodities isn’t unique to billionaires, but as with stocks and bonds, the size and scope of billionaires’ investments dwarf those of average investors.

Billionaires often take positions in precious metals like gold and silver, and they may invest in other commodities like livestock, mineral rights, and agricultural products.

Real Estate

Billionaires have to manage liquidity as much as any other investor, but their wealth allows them to buy less liquid tangible assets as well. The most common example is real estate, which includes personal property like homes in desirable locations and occasionally, small islands.

Many billionaires have a portfolio of commercial properties, land, and development projects, both for their profit potential as well as the increased stability they can provide to balance out stock holdings.

Office buildings are the most popular choice, followed by retail and healthcare facilities. There has also been an uptick in purchase of farmland since the Russian invasion of Ukraine, as this conflict demonstrated the risk of relying on a small area for an outsized portion of the world’s food supply.

Alternative Assets

In addition to real estate, there are many other tangible assets that billionaires buy, both for the profit potential as well as their own pleasure. For example, collecting art is a favorite pastime among the ultra-wealthy.

Some private collectors have galleries that rival small museums, such as David Geffen (net worth $7.7 billion), who owns the largest private art collection in the United States and the second-largest in the world. Notorious hedge fund manager Steven Cohen (net worth $17 billion) has more than $1 billion invested in fine art, including works by Jeff Koons, Picasso, and Andy Warhol.

Other valuable collectibles that can be found in billionaires’ portfolios include rare books, cars, jewelry, and intellectual property. Michael Dell, founder of Dell Computers, invested in vintage photographs, and Jeff Bezos, founder of Amazon, retrieved Apollo 11’s booster rockets from the ocean floor, along with dozens of other NASA artifacts.

Oracle’s Larry Ellison has an impressive collection of airplanes and cars, and Microsoft’s Bill Gates collects luxury sports cars – the sort that grow in value over time.

Where Do The Wealthy Put Their Money?

The bottom line is that billionaires have more choices when it comes to their investments. They have fewer concerns about liquidity, and they can afford to take some risks. For example, they can financially support a brand-new company with a brilliant idea that could disrupt entire industries.

Billionaires also have some flexibility in terms of putting money into their passion projects. They can purchase rare automobiles and collect one-of-a-kind works of art that are typically out of reach for typical investors. However, the most common investment is growing their own companies, followed by traditional stocks and bonds that are available to all investors.

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