You are considered a high-net-worth individual if you have a minimum of 1 million dollars in liquid assets, excluding a primary residence. This can include assets such as stocks, bonds, cash, or non-liquid assets like real estate.
High-net-worth investing strategies help those with large amounts of assets achieve a diverse portfolio, higher returns, and passive income, but it's important to understand the risks and how to manage them compared to traditional investments.
What strategies can you make use of for your future investments, and how can you preserve your capital? This article will explore strategies to help you feel confident knowing that you're investing in your freedom and security for the future.
High-net-worth investing strategies hold a number of benefits for private investors interested in expanding their current portfolio.
More financial doors open. Compared to the average investor, high-net-worth individuals can access opportunities such as private placements or high-return investments.
In the world of finance, there are groups of financial investors that own liquid assets of more than $1 million.
These assets include investable assets, and money in the bank, and don't cover personal assets such as a primary residence. As each group has various levels of wealth, different investment strategies are used.
Knowing where you stand can help you shape your investment strategies and financial goals. Although higher wealth levels can promote more opportunities, investing can be more complex and involve potential risk.
This includes people with assets less than $1 million, but more than $100,000. While not as wealthy as other categories, these individuals have accumulated enough wealth to be able to build their investment portfolios.
These are people with a net worth higher than $1 million, but less than $5 million. This level of wealth opens doors to more sophisticated investments such as hedge funds, private equity, and alternative investments.
These individuals have liquid assets between $5 million and $30 million. Very-high-net-worth people can explore exclusive investment opportunities and often draw interest from financial advisors due to this potential.
These are people who own more than $30 million in liquid assets. As an elite few, this category can explore tax benefits through modern investments and charitable donations.
Regardless of how large your current portfolio is, expanding your assets into a diverse range of funds can be a worthy long-term investment.
Investing in bonds, stocks, or mutual funds can compound interest over time, an excellent option for investment portfolios. Subject to market fluctuations, diversifying these investments is key to balancing risk and reward.
Australian bonds include Australian Government Bonds, Government Bonds, Corporate Bonds, and stocks such as index funds, balanced funds, growth stocks, myriad bond classes, and dividend stocks. Corporate bonds are one of the ideal options as they are low risk, preserve your capital, and offer you regular interest.
A hedge fund is a high-risk investment managed by qualified professionals, requiring a minimum of $1 million and is well-suited to high-net-worth individuals. Generating high returns, they come with higher fees and less regulation. Investment types include event-driven funds, market-neutral funds, and long-short funds.
In comparison to bonds, stocks, or cash, alternative investments in Australia can cover numerous assets, from commodities to private equity.
Alternative investments cover high-yield savings accounts. This can include forex, money market funds, exchange-traded funds, P2P lending, investment bonds, managed futures, art, wine, natural resources, or alternative credit.
Do you have significant upfront capital? If you're a high-net-worth investor, you can continue to grow your wealth by using real estate within commercial and residential markets. Unlike other investment types, domestic and international real estate can survive uncertain markets, providing security for high-net-worth groups.
Investing in a cause that matters is another investment strategy that works as a tax benefit. You can donate by offering a donor-advised fund, giving through a family foundation, or giving to a charitable trust.
With a high-net-worth portfolio, there are many investment strategies you can use at your discretion. In comparison to traditional investing, investing as a high-net-worth individual needs a sophisticated approach.
When navigating this financial landscape, it’s essential to have access to market insights, personalised investment advice, and specialised services such as tax planning and asset protection.
What are your long-term and short-term financial goals? Do you want money put away for a wedding? Financial planning can help you adjust your investment strategies according to financial decisions regarding marriage, children, jobs, responsibilities, retirement, and inheritance for future generations.
As an investor, you need to be up to date with current market changes, update your portfolio, and review these changes. Your investment choices need to align with future goals. After all, each goal may require a new approach.
Keeping track of money and performance prevents a number of issues down the track. Consider how many accounts you're opening, which can result in higher costs.
Ensure you have fewer tax forms, check for duplicate investments, create a simple retirement plan, and simplify your estate settlement. To be a smart investor, you need to be aware of where your money is going, and make changes accordingly.
Protecting high-net-worth assets can prevent risks such as loss due to market volatility, legal problems, and personal threats.
Australians can consider allowing a trustee to protect assets and distribute the income to beneficiaries, reworking the company structure, or putting insurance coverage into place, such as life or trauma insurance.
Some investments can outperform others. Selling off a portion of existing assets and moving them into higher-performing ones can stop your portfolio from falling. This is a great risk-management strategy to remember, and can also involve selling current investments or buying new ones.
Having a long-term approach to your portfolio can help you be aware of market inflation and rising interest rates, but also assist you in terms of compounding your return. Investing in real estate is a classic example. This approach can prevent losses from small-scale fluctuations and is generally considered more stable.
Planning your taxes effectively can help to maximise your after-tax returns. Focus on the timing of your sales or assets, and understand what tax benefits are available to you. Salary-sacrificing super, asset write-offs or allowances, and charity salary packaging is another option.
Australian government bonds provide a low-risk and secure option with predictable income streams, offering stability to your investment portfolio. With regular income, a capital return is almost guaranteed.
High-net-worth investors require the right expertise for their portfolio. A professional can assist you with a comprehensive financial plan, resources, customised advice, wealth monitoring and management.
With a high net worth, smart investment choices shape your financial future. What should you weigh up when considering financial security in terms of a portfolio strategy?
Balancing short-term gains and long-term stability is crucial to success. Short-term investments are an attractive, exciting option and offer fast returns, but they carry higher risk and often tax implications. With unpredictable market fluctuations, you’re more likely to lose money rather than gain it.
On the other hand, while long-term investments are less risky, they demand patience and a thorough strategy for return. Long-term investments such as real estate and government bonds compound over time, offering more stability. Ultimately, the aim is to strike the right balance between these approaches.
Collaborating with finance professionals will offer you an in-depth understanding and fresh perspective of the Australian financial landscape. Always ensure to diversify your portfolio with short-term gains and long-term benefits. At the end of the day, the goal isn’t to always accumulate wealth but to preserve it for the future.
Looking for experience in tax laws, investment regulations, and strategies that align with your financial goals? An independent financial adviser throughout Melbourne can offer guidance based on current trends and industry knowledge.
The world of high-net-worth investing comes with challenges. With an unpredictable market, patience, performance tracking, and monitoring are key to achieving your financial goals.
If you’re aiming to increase your financial assets with a solid investment portfolio, expanding is possible. Taking your capital into consideration, financial advisors with expertise can assist with your economic growth, wherever you want it to move going forward.
Whether you want help with estate planning or exploring your ideal markets, wealth managers at Dominium Capital understand the value of a results-focused portfolio, and what it takes to reach it.
Experienced in handling all private investing strategies, contact us today to feel confident knowing that your high-net-worth business objectives will be supported.
General Advice Warning: This article does not consider your personal circumstances and is general advice only – unless otherwise stated.
You should not act on any recommendation without considering your personal needs, circumstances and objectives. Dominium Capital recommends you obtain professional financial advice specific to your circumstances.
Any general financial advice is provided by Dominium Capital Financial Advisers Pty Ltd, a Corporate Authorised Representative of Dominium Capital Pty Limited ACN 142 188 510 125 AFSL 461653