Asset allocation ideas gleaned from the portfolios of world's wealthiest
By Dian Vujovich
Results of the World Wealth Report are out and the big news? The rich were richer at the close of 2010 than they ever have been.
According to the latest World Wealth Report from Cap Gemini and Merrill Lynch Wealth Management, being rich is both hot and popular. Thumb through that report and you’ll learn not only are the rich richer than ever before, there are more of them roaming this Earth than ever before.
In fact, around the world there were nearly 11 million people with more than $1 million of investiable assets with wealth totaling $42.7 trillion at the end of 2010. That translates to 10 percent more wealthy individuals around with assets totaling 11.2 percent more at year- end 2010 than at year-end 2009. Of those total assets, $11.6 trillion were in the hands of the wealthy who live in North America.
Seems kind of hard to believe given that much of what’s written in newspapers and heard on TV these days is all about debts, people out of work and state and local governments trying to find two nickels to rub together to keep their town’s firefighters and police on the payrolls.
But then again, the rich are different and their concerns not always the same as those of most folks. Take, for instance, their point of view on investing.
While employees at say Sears or Home Depot might be trying to figure out what’s the best growth fund for monies in their 401 (k)s, the ultra-wealthy aren’t as concerned about growing their money as keeping it.
(You know, there’s a lesson to be learned from that “keeping it” part no matter what one’s economic status is. Remember that when heading out to the malls to take advantage of the huge sales going on this holiday weekend.)
Richies who live in North America do like stocks, they just don’t have all of their monies invested in them as someone saving for retirement might have. That said, the amount invested into equities was more at the close of 2010 than it was a couple of years back– about 43 percent.
Look at the portfolios of all the ultra-wealthy around the globe, however, and the picture is a bit different: At the end of 2010, High Net World (HNW) individuals held 33 percent of their investible assets in stocks, 29 percent in fixed-income products, 22 percent in various alternative investments/commodities, and 14 percent in cash. Not sure where the other two percent went—maybe on a Bugatti Veyron Super Sports car. Nice rides do have their place.
So what can you, your kids, your family office and great Aunt Sue glean from all of this? Well, when I looked at the asset allocation of the HNW from another side and saw about 43 percent of their portfolios were invested in fixed-income and cash or cash equivalents, and 55 percent into equities and alternative investments, the word “balance” came to mind.
That’s a good word for investors of all ages and income levels to keep in mind. It might be even trump suggested asset allocation strategies especially for those concerned with keeping-while still growing- their money.
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