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Investments For High-Net-Worth Individuals — A Guide [2024]
As we proceed throughout 2024, the investment landscape for high-net-worth individuals continues to evolve, with an increasing array of new opportunities popping up to cater for wealthy individuals. This includes new opportunities within the crypto market, commercial real estate, and venture capital in industries such as artificial intelligence, space exploration and climate tech; to name a few.
But at the heart of securing one's net worth lies diversification, as not every investment or venture will be a success. So what having a diversified portfolio does is help to preserve and grow wealth in fluctuating economic environments. While this is all self-explanatory for experienced high-net-worth individuals, it is important to note the existence of many nouveau riche individuals who have only recently attained their wealth, and therefore lack investing expertise.
For this reason, this article will provide a comprehensive overview of investment vehicles and assets that wealthy individuals can gain exposure to, with a specific emphasis on crypto investing.
In this blog post, you can find:
- Conventional Options for High-Net-Worth Individuals
- Alternative Investment Options
- Crypto Investing for High-Net-Worth Individuals
Let's dive right in!
Conventional Options for High-Net-Worth Individuals
For those who consider themselves to be high-net-worth individuals (usually 1 million pounds plus), the usual first port of call is usually to look at traditional investments; and subsequent portfolio management options.
Below are some traditional investment avenues that may be of interest to those reading:
Traditional investments
1) Stocks
Investing in the stock market has been one of the most popular avenues for wealthy individuals who are looking for a combination of yield and stability.
Put simply, stocks represent a share in the success of some of the world’s leading companies, and can be used to bring about quick profit if a company's stock is skyrocketing (common stocks), or provide steady income through dividend payments (restricted stocks).
It is important to note that although stocks tend to have less volatility than other asset types, losses can still be made.
2) Government and corporate bonds
For those who are more preoccupied with safeguarding their assets, and who want less volatility, investing in government and/or corporate bonds is ideal. Government bonds are well known for their high security, while corporate bonds tend to have higher yield potential.
So one typical investing tactic for high-net-worth individuals is to invest in both for a mix of safety and returns.
3) Commercial and luxury real estate
Investing in real estate is one of the more common investing options for wealth preservation and growth, and high-net-worth individuals have tended to focus on commercial and luxury ventures.
Commercial properties often yield substantial returns through both capital appreciation and rental income, whereas luxury real estate not only serves as a stable investment, but also has the additional benefit of symbolising status and wealth.
4) High-interest savings accounts
Essential for liquidity management, high-interest savings accounts provide a secure venue for funds you need on hand. Unlike regular savings accounts, they offer superior interest rates, ensuring that your liquid assets are still working for you.
5) Precious metals
In today's day and age, fiat currencies are consistently being devalued, and economies are struggling to grow. So in terms of performance, precious metals like gold and silver offer a great hedge against inflation and economic downturn due to their scarcity and utility. What's more, precious metals can also bring about a good ROI if they are bought and sold within a mid to long term timeframe.
6) Art
Beyond the aesthetic pleasure, art can be a profound investment. With values that can significantly appreciate over time, art offers both cultural enrichment and economic benefits. Its market dynamics are often unlinked with more traditional investments, providing unique diversification benefits.
7) Luxury goods
High-end collectibles—be it fine watches, vintage wine, or luxury cars—can often appreciate in value. As a tangible asset, luxury goods not only enhance lifestyle but can also serve as a viable investment alternative; especially in niche markets where rarity and demand drive prices.
8) Land
Last but not least, land ownership has been used as a means of wealth creation for hundreds of years, and is still a popular avenue for wealthy investors today.
Common ways of yielding substantial returns include strategic developments on land aquired, or through natural appreciation due to geographical and economic factors. Land is usually more valuable in areas that are experiencing growth, or areas that are limited by natural constraints; meaning the potential for appreciation is high.
Portfolio management
Once a high-net-worth individual identifies optimal investments, the next step is to either assemble and manage a portfolio themselves, or hire the services of an accredited financial advisor to manage one in their stead.
The purpose of portfolio management is not only to select compelling investments, but to manage them in a way that optimises returns and mitigate risks. A comprehensive strategy involves continuous assessment and rebalancing of a portfolio to align with changing market conditions and financial goals, and this could include shifting allocations between asset classes, taking advantage of tax efficiencies, or quickly selling off assets in order to prevent severe losses .
So having a diversified portfolio not only ensures that investments are protected, but increases the likelihood of passive income.
Alternative Investment Options
As can be seen, conventional investments provide an array of different benefits when it comes to wealth preservation and growth. As part of a well-thought-out portfolio, these investments
However, due to a combination of technological advancements and higher-yield opportunities, high-net-worth individuals are increasingly turning towards alternative investment options, and two of the most popular are investing in emerging markets via venture capital firms (private equity), or directly investing in alternative avenues or assets.
Venture capital
Investing through a venture capital firm allows high-net-worth individuals to strategically invest in the companies of tomorrow. By funding startups in sectors such as blockchain technology, biotech, renewable energy and space exploration (to name a few), investors not only stand to gain substantial returns, but can also have the satisfaction of contributing to revolutionary advancements. Although there are still risks in venture capital, investing in the right companies and industries can bring about significant ROI.
There are two types of VC avenues - setting up your own firm to directly invest in startups, or providing liquidity to existing VC firms. For most high-net-worth individuals, the latter is advisable, as most VC firms are very busy supporting the startups they invested in, and it also requires a lot of past VC/business experience.
Alternative investment avenues
Not every high-net-worth individual will want to get into venture capital, and would much rather invest in assets or avenues that are publicly available, and with shorter profit timeframes. The good news is with the advent of technology and new opportunities arising, there are some compelling investment opportunities.
Below are some alternative avenues that high-net-worth individuals could invest in:
1) Green bonds
Due to climate change becoming an increasingly important topic for individuals and governments alike, green bonds have become a popular way for investors to contribute to environmental goals with a financial return.
High-net-worth individuals can now invest in bonds that support government-approved environmental projects, including ecosystem restoration, clean energy ventures, and climate mitigation initiatives. These bonds also come with tax incentives, and this further adds to their appeal.
2) Royalty financing
Investing in intellectual property rights for royalties is increasingly becoming popular for those looking to make further income on their wealth.
Whether it’s the recurring income from a hit song, a groundbreaking patent, or the enduring charm of a literary work, royalty financing allows investors to earn a slice of ongoing profits. This type of investment provides a diversification away from traditional market fluctuations, and taps into continuous revenue streams from cultural and technological consumption.
3) Litigation financing
Litigation financing is an increasingly popular form of investment which involves funding legal proceedings in return for a part of the financial award from successful litigation. Not only does it offer substantial potential returns, but litigation financing also diversifies an investor’s portfolio against market cycles, as its success is tied to legal outcomes rather than economic conditions.
As can be seen, there are attractive alternative investment avenues that high-net-worth individuals can potentially invest in to further diversify their portfolios.
But in the past few years, it's been alternative assets that have really caught people's attention, and few have been more compelling than cryptocurrencies.
Crypto Investing for High-Net-Worth Individuals
As a result of the current financial landscape suffering from a mix of stagnation, devaluation and centralisation, cryptocurrencies like Bitcoin and Ethereum have emerged as compelling assets due to their store of value and fintech utilities; and impressive return opportunities. For high-net-worth individuals who are looking to diversify their investment portfolios, then including crypto can bring about some impressive results.
It is important to note, however, that the crypto market is also known for its high volatility, which can be explained by its relatively small market cap, and nascent industry status. So various factors such as market sentiment, technological developments and regulatory news can significantly influence asset prices in the short term.
But while the risks should be taken seriously, it is this same volatility that can also open substantial up opportunities for impressive returns. Price increase is generally caused by news of increasing adoption, positive regulatory developments, or institutional investors investing heavily into crypto ETFs or companies.
But for those with a more long-term investing outlook, cryptocurrencies like Bitcoin can also be used as a hedge against inflation and fiat devaluation. This is because the limited supply of Bitcoin is akin to that of scarce resources like gold, and one simply has to look at Bitcoin's historical performance to see that the cryptocurrency has the potential to serve as a robust store of value.
Tailored crypto strategies for high-net-worth individuals
For high-net-worth individuals who are sold on the benefits of crypto, and who want a combination of growth, sophistication and security, there are few better platforms to facilitate this than ICONOMI.
ICONOMI is one of Europe's oldest and most reputable crypto investment platforms, and one of the few to be regulated by the Financial Conduct Authority (FCA). The platform primarily specialises in offering bespoke crypto strategies, which are basically cryptocurrency portfolios that are carefully assembled (and continuously adjusted) by seasoned experts. Each strategy has transparent data that shows allocation percentage and historical performance, and can easily be joined and exited with just a few clicks.
To illustrate the potential of investing through crypto strategies, consider the Blockchain Index Strategy, which has seen its assets cumulatively increased by 71.38% for just this year alone. So if a high-net-worth individual invested £150,000 into this strategy, their assets would have grown by £107,070! This of course can change, but it shows the exceptional growth potential of investing into well-thought-out crypto portfolios.
So for high-net-worth individuals who want to diversify into crypto with a hands-off approach, ICONOMI Private is an ideal solution, as it gives wealthy individuals access to meticulously curated crypto strategies, and that are designed to cater to various risk tolerances and market outlooks.
To participate, the minimum amount for signing up to ICONOMI Private is £150,000 (€100,000).
Conclusion
As can be seen, there are ripe investment opportunities in 2024 for high-net-worth individuals who want to safeguard their wealth, or make passive income on their assets. But make no mistake, the key to success lies in diversification, and combining traditional investments like stocks, bonds, and real estate with innovative alternatives such as venture capital, green bonds, and cryptocurrencies.
When it comes to crypto investing, regulated platforms like ICONOMI provide sophisticated and tailored strategies that can enhance portfolio performance; as seen through the example of the Blockchain Index Strategy. In other words, successfully investing in crypto has never been easier!
But as always, no financial instrument is infallible, and it is advisable to consult with an accredited financial advisor to develop a personalised investment strategy, and see whether ICONOMI's offerings line up with your goals and risk tolerance.
If you enjoyed this article, you may be interested in our other titles:
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