As the first generation of wealth creators, HNWIs and UHNWIs know how to build fortunes and identify money-making opportunities. But where do the rich store their wealth? Our study shows that 75% of them concentrate their assets in categories that are riskiest in the context of family wealth transfer. What are these assets, and what are the associated risks?
High-net-worth individuals often follow common misconceptions in assessing asset liquidity in relation to family wealth transfer. In reality, it’s not the same as the ease of transferring assets to the next generation.
Only 3.29% have investments in alternative assets. These include art, collectibles, wines, digital assets, rare cars, and others.
Ever wondered why the rich keep getting richer? It’s not just about earning a fat paycheck. The wealthy build their fortunes through smart asset ownership that generates passive income, appreciates over time, and creates lasting wealth. I’ve spent years studying what separates the financially free from those struggling paycheck to paycheck, and it almost always comes down to what they own, not just what they earn.
In this article, I’ll break down the top 10 assets that wealthy people consistently invest in to maintain and grow their wealth These aren’t just toys for the rich—many of these investments are more accessible than you might think, even if you’re just starting your wealth-building journey.
The Foundation of Wealth: Real Estate Holdings
Real estate consistently tops the list as the primary asset class for the ultra-wealthy. According to Knight Frank research, those with $30+ million in net worth allocate over half their wealth to real estate—about 32% in residential properties and 21% in commercial real estate.
Why do the rich love property so much?
- Steady appreciation – Property values typically increase over time
- Passive income – Rental payments create consistent monthly cash flow
- Tax advantages – Numerous deductions and depreciation benefits
- Leverage potential – Using mortgages to control valuable assets with less capital
- Inflation hedge – Property values often rise with inflation, protecting purchasing power
While many people struggle to purchase even their first home, wealthy investors employ sophisticated strategies to control multiple properties. They use rental income to cover mortgage payments while the properties appreciate in value, creating a self-perpetuating wealth machine.
Entry point: If you’re not ready for direct ownership, consider REITs (Real Estate Investment Trusts) that allow you to invest in real estate with much lower capital requirements.
Beyond Basic Stocks: Sophisticated Investment Portfolios
While the average person might have a simple retirement account, wealthy individuals maintain sophisticated investment portfolios carefully managed by private banking teams These portfolios typically include
- Blue-chip stocks with consistent dividend payments
- Municipal bonds for tax-free income
- Private placements not available to retail investors
- Exclusive investment opportunities with $250,000+ minimum buy-ins
The critical difference isn’t just the amount invested—it’s about access. High-net-worth individuals get invited to investment opportunities that most people never even hear about. They also benefit from personalized wealth management strategies that optimize returns while minimizing tax implications.
According to Gallup, 87% of U.S. households earning $100,000+ annually own stocks, making this a cornerstone of wealth-building for the affluent. However, stocks typically make up only about 26% of ultra-wealthy portfolios—significantly less than their real estate holdings.
Private Equity: Owning Tomorrow’s Success Stories
Private equity investments allow wealthy individuals to own stakes in companies before they go public, These investments often yield exceptional returns—just think about early investors in companies like Uber or Airbnb who saw their investments multiply many times over
A Campden Wealth and Titanbay report reveals that the average ultra-high net worth investor allocates about 20% of their overall portfolio to private equity, with 21% of that allocation going to venture capital specifically.
These opportunities are generally restricted to accredited investors (those with net worths exceeding $1 million), and they require:
- Substantial capital commitments
- Willingness to lock up money for years
- Comfort with illiquidity and higher risk
- Sophisticated understanding of business valuation
For those without accredited investor status, equity crowdfunding platforms now offer a more accessible entry point, though with more limited opportunities.
Art and Collectibles: Beauty That Appreciates
Fine art and collectibles serve dual purposes for wealthy individuals—they’re both status symbols and investment vehicles that can appreciate dramatically in value.
From Picasso paintings to rare watches, these tangible assets provide:
- Portfolio diversification away from financial markets
- Status and aesthetic enjoyment
- Cultural and historical significance
- Protection against inflation
- Potential tax advantages when donated
Wealthy collectors can access private art dealers, exclusive auctions, and professional authentication services. They also have the resources for proper storage, insurance, and security for their collections.
One example? A single painting by Jean-Michel Basquiat purchased for $19,000 in 1984 later sold for $110.5 million in 2017. That’s an increase of over 580,000%!
Transportation Assets: Wings and Wheels
Private jets, yachts, and luxury car collections are hallmarks of extreme wealth. While most transportation assets typically depreciate, they provide significant lifestyle benefits and can offer tax advantages when used for business purposes.
Consider these numbers:
- A private jet: $3+ million plus substantial annual operating expenses
- Luxury yacht: Millions in purchase costs plus 10% annually in maintenance
- Rare car collection: Some models appreciate significantly over time
While these might seem like pure indulgences, they provide the wealthy with invaluable time efficiency, privacy, and sometimes, unexpected appreciation in value. Some rare vehicles have proven to be better investments than many traditional assets.
Business Ownership: The Ultimate Wealth Builder
Business ownership represents one of the most significant wealth disparities between economic classes. The ultra-wealthy often own multiple businesses or hold substantial equity stakes in companies they’ve built or acquired.
This ownership provides:
- Ongoing income from business operations
- Potential long-term appreciation of business value
- Ability to leverage business assets for expansion
- Optimal tax structures and write-offs
- Legacy building opportunities
While starting a business requires less capital than ever thanks to digital platforms, scaling to significant size typically requires access to substantial resources. Many wealthy individuals continually reinvest profits to expand their business holdings, creating a compounding effect on their wealth.
Precious Metals and Gems: Tangible Wealth Storage
Physical precious metals and gems serve as a hedge against economic uncertainty and inflation. Wealthy individuals often maintain significant holdings in gold, silver, diamonds, and other precious stones stored in private vaults with comprehensive insurance coverage.
These tangible assets provide:
- Portfolio diversification
- Protection against currency devaluation
- Historical stability during economic crises
- Portability of wealth in compact form
- Generational wealth transfer potential
While smaller investors can purchase precious metals in modest quantities, the wealthy acquire substantial holdings, including rare coins and gems that can appreciate more dramatically than standard bullion.
Trust Funds and Legal Structures: Protecting Generational Wealth
Complex trust structures help wealthy families preserve and transfer wealth efficiently across generations. These legal entities provide:
- Significant tax benefits
- Asset protection from creditors and lawsuits
- Control over wealth distribution to heirs
- Privacy and confidentiality
- Legacy preservation
Professional trustees and estate planning attorneys help structure these vehicles optimally. While basic estate planning is available to everyone, sophisticated trust strategies often require significant assets to justify their setup and maintenance costs.
Intellectual Property: Making Money From Ideas
Intellectual property rights generate passive income streams for wealthy individuals and their businesses. These assets, from technology patents to entertainment royalties, can produce revenue for decades with minimal ongoing investment.
The wealthy can afford to:
- Develop and protect their IP through extensive legal channels
- Create portfolios of patents or creative works
- License their IP to others for ongoing revenue
- Defend against infringement through litigation if necessary
From music catalogs to software patents, IP assets create “money machines” that continue generating revenue long after the initial creation work is complete.
Alternative Investments: Advanced Wealth Diversification
High-net-worth individuals diversify into alternative investments that most people never consider, including:
- Hedge funds with sophisticated strategies
- Options and futures contracts
- Cryptocurrency holdings
- Specialized commodity investments
- Carbon credits and ESG investments
These investments often require a sophisticated understanding of complex markets. Wealthy investors can afford to take calculated risks with a portion of their portfolio in search of higher returns, particularly during times of market volatility.
How To Start Building Your Own Wealth Through Assets
The assets distinguishing wealthy individuals from others may seem out of reach, but many can be accessed at smaller scales. Here’s how to start:
- Begin with real estate – Even a single rental property can generate income and appreciation
- Invest in REITs – Get real estate exposure without direct ownership
- Build a diversified stock portfolio – Focus on dividend-growing companies
- Consider fractional shares – Own pieces of expensive stocks with limited capital
- Explore crowdfunding – Participate in private equity at lower minimums
- Start a side business – Build equity in your own enterprise
- Invest in your education – Develop skills that increase your earning potential
- Purchase small precious metals holdings – Begin with modest gold or silver investments
- Create intellectual property – Develop content, software, or products you can license
- Maximize retirement accounts – Take advantage of tax-advantaged growth
The key is consistency and patience. The wealthy often take decades to build their asset portfolios, but they start somewhere—just like you can today.
The difference between the wealthy and everyone else isn’t just income—it’s what they do with that income. While most people spend their paychecks on liabilities (things that cost money to maintain), the rich consistently convert their earnings into assets that generate more money.
This asset accumulation creates a flywheel effect where wealth generates more wealth, even while they sleep. That’s why Warren Buffett famously said, “If you don’t find a way to make money while you sleep, you will work until you die.”
By understanding and gradually acquiring the assets that wealthy people prioritize, you can begin building your own financial freedom. Remember, it’s not about replicating the exact portfolio of a billionaire—it’s about adopting the wealth-building principles they follow and applying them at whatever scale makes sense for your current situation.
What asset will you start building first? I’d love to hear your thoughts in the comments!
What do millionaires do with their money? What are the most commonly included assets in family portfolios?
Families mostly prefer cash and its equivalents. 31% keep their money in deposit boxes, banks, or brokerage accounts. Real estate makes up 12.5% of their portfolios. Next comes stocks in private companies at 9.1%, and stocks in public companies at 8.1%.
Private equity and hedge Funds
Penguin Analytics indicates that UHNWI and HNWI families dedicate 17.2% of their assets to stocks, with which they target two main goals.
First, they aim to expand the share in their portfolio that generates passive income. Dividend-paying stocks complement rental income from real estate.
Second, high-nets focus on diversifying not just their portfolios but also their time. Consequently, they’re on a mission to save room for new experiences rather than dedicating all of their time to managing investments on a daily basis.
Dividend stocks check all the boxes. Additionally, they offer some tax advantages as well. A long-term investment in stocks also allows their net worth to grow tax-free through capital gains, as profits in appreciating stock prices are only taxed when sold.
Here’s How The Rich Invest Their Money
FAQ
What assets do the rich invest in?
Equities and Stock Markets
The stock market is a primary vehicle for wealth accumulation. The wealthy invest in publicly traded companies, private equity, and hedge funds. Many also hold shares in the companies they own or manage, further increasing their net worth.
Where do millionaires keep their money if banks only insure $250k?
What do 90% of millionaires do?
The famed wealthy entrepreneur Andrew Carnegie famously said more than a century ago, “Ninety percent of all millionaires become so through owning real estate.
Where do rich people keep their cash?