The factors that help someone become super rich could be outside of your reach. But there are also factors you can incorporate into your own life when making financial decisions.
Check out some of these investing mistakes the super-rich never make and see if you can incorporate them into your own financial success when you start investing.
Steal this billionaire wealth-building technique
The ultra-rich have also been investing in art from big names like Picasso and Bansky for centuries. And it's for a good reason: Contemporary art prices have outpaced the S&P 500 by 136% over the last 27 years.
A new company called Masterworks is now allowing everyday investors to get in on this type of previously-exclusive investment. You can buy a small slice of $1-$30 million paintings from iconic artists, all without needing any art expertise.
If you have at least $10k to invest and are ready to explore diversifying beyond stocks and bonds,see what Masterworks has on offer. (Hurry, they often sell out!)
Investing in companies with major issues
You might think that a company with issues could be a great investment when the market gives up on it. After all, you’ll be there to cash in if the company weathers the storm.
But the super-rich have plenty of options when it comes to where they want to invest their money, and they know it’s better to put it into sound investments than choose a risky option weighed down by major challenges.
Want to learn how to build wealth like the 1%? Sign up for Worthy to get ideas and advice delivered to your inbox.
Not doing their own research
Even super-savvy investors need someone else to give them advice from time to time. But that doesn’t mean they don’t do their own research and fully understand potential investment opportunities.
The super-rich understand where their money is going, and they don’t rely on rumors or blind advice to lead them. They ask questions and dig deeper into the numbers. The super-rich know nobody truly cares about their money as much as they do.
Only thinking about the upside of an investment
Investing can be a tricky prospect. Sometimes, you'll hit a home run, and sometimes, you may strike out. The rich make sure to consider the pros and cons of certain investments.
Don’t focus on just making it rich with an investment. Consider how viable the investment is over the long term. And if the investment doesn’t play out how you think it will, what does that look like for your finances?
Get a free stock valued between $5 to $200
Secret: You don't need thousands of dollars to buy thousand-dollar stocks or create a diverse portfolio.
Robinhood offers a method of investing called “fractional shares.” On its own, one share of a single stock could cost a lot of money, making it difficult to diversify. Robinhood allows you to buy pieces of stock instead, so you have the option to build a diverse portfolio quickly.
Let’s say you want to invest $250, as an example.
With that amount, you could build a relatively diverse portfolio with an investment of $50 in a big tech stock, $50 in a retail stock, $50 in an energy stock, $50 in a manufacturing stock, and $50 in a bank.1
Even better news? Add a Robinhood Gold membership, and you’ll get access to 5.00% APY2on your uninvested cash3and the ability to buy and sell stocks 24 hours a day, 5 days a week.
Open and fund a Robinhood account and earn up to $200 in stock
Keeping pace with others
You may think you need to keep up with fellow investors by investing in a popular stock or investing a certain amount of cash to show you can hang with the big players.
But following the crowd or investing just to show off to others can backfire if you’re not doing it for yourself based on sound policies. Instead, keep your eyes on your own paper and focus on what’s best for your finances.
Not recognizing the need for change
You may think making certain types of investments year after year is a great plan because it’s worked for you so far.
But the ultra-rich know you need to adapt to changes in the market constantly. You need to continue reviewing your portfolio and toss out older investments that may not be working for newer investments in different companies or industries.
Trending Stories
Never rebalancing their portfolio
It doesn’t matter how much money you have. Your portfolio needs to age with you, including reducing your exposure to risky investments as you get older and have less of a chance to recover from any downturns.
You can take more risks when you’re younger and have plenty of years to rebuild after a downturn. But remember to rebalance your portfolio every few years as you get older.
Forgetting about savings
Investments can be flashy and glamorous and you may think it’s the fancy stuff that makes the ultra-rich so successful.
But you must also remember to stick with one of the most fundamental things about investing: savings. Liquidity is what pays for day-to-day activities.
Check out your local bank or financial institution to see what options you have for high-yield savings accounts or other financial products.
Not diversifying their investments
The stock market could be a good option for you to invest your money, but it’s not the only option.
Consider diversifying your portfolio. You may want to include real estate, government bonds, seed investments in companies, and other non-stock options.
Incurring consumer debt
You may think the ultra-rich have money to spend, but even they don’t overspend beyond what they have in the bank.
Debt can eat away at your plans for investing and savings. So, while you may want to invest your money in certain places or take some risks, you don’t want to do that at the expense of falling deep into consumer debt.
Earn up to a $300 bonus and grow your money with up to 4.20% APY
This powerful combination checking + savings account from SoFi® allows you to earn up to a $300 bonus with direct deposit and grow your money with up to 4.20% APY.4
This is one of the top accounts we’ve seen, and offers like this can be rare. You work hard, and now it’s time to make your money work for you — with SoFi, you can grow your money with hardly any effort!
SoFi has no account or overdraft fees5 and additional FDIC insurance up to $2 million on deposits is available through a seamless network of participating banks.67 Plus, you can receive your paycheck up to 2 days early.8
How to earn up to $300: Sign up and make a direct deposit within the first 25 calendar days of the promotional period, then collect a $300 cash bonus with a direct deposit of $5,000 or more.
SoFi is a Member, FDIC. 7
Open your SoFi account and set up direct deposit
Thinking they need a house
Real estate can be a good investment to diversify your portfolio, but it can also be a money pit. And don’t add to your real estate portfolio unless you can afford the additional costs.
Make sure you have enough money to pay at least 20% for a down payment and factor in any potential expenses like maintenance and repairs that could add up and hurt your bottom line if you’re not prepared for them.
Trying to do everything on their own
You may think the ultra-rich become ultra-rich on their own with their knowledge and investments.
But they’ve cultivated a strong network of other people who may be entrepreneurs or investors that they can work with as they all build wealth together.
So, work on creating a network you can trust and invest with. Perhaps you’re interested in a particular industry or a specific type of business. It may be a good idea to connect with others in that area and see how you can work together to increase your wealth.
Bottom line
You don’t have to be ultra-wealthy to use the tools of those who are rich to save money and invest wisely.
You can take these and other wealthy money moves and scale them down to make it work for you. Perhaps you can use it to save money for a specific goal.
Remember that no matter how much wealth you have or how little you start with, financial fundamentals are still important as you build your portfolio.
Masterworks Benefits
- Invest in art like a millionaire for a relatively low cost
- Art investments have outperformed the S&P 500 by over 131% for 26 years
- Purchase shares of artwork by top artists
- Hedge against inflation and diversify your portfolio
Paid Non-Client Promotion
FinanceBuzz doesn’t invest its money with this provider, but they are our referral partner. We get paid by them only if you click to them from our website and take a qualifying action (for example, opening an account.)
Subscribe Today
Want extra-cash moves to come right to you?
Stop browsing endlessly. Get proven ways to earn pocket money, help cover rent, and crush your debt — sent to your inbox daily.
Author Details