What do the rich invest in?

Diversity and interest in the global market are some of the criteria. The way they invest differs from that of other mortals in the joy of meeting their needs and their ability to focus on leaving enough money for their grandchildren. They can additionally focus on beating inflation, spending and taxes, according to Borja Durán, CEO and CEO of Wealth Solutions. While the rich have the purchasing power to pamper themselves, they also make sure they hold the savings that allow them to continue growing their wealth. The vast majority keep 7% of their capital in money market instruments such as cash and corporate bonds in order to face unforeseen events and compensate for possible market declines.

According to sources at Banco Santander, the low-interest rate environment in recent years has generally favored investors who “have taken on a little more risk in their portfolios than in previous years.” According to Juan Verdaguer, regional manager of Mirabaud Catalonia, this has translated into a decrease in investment in fixed income and an increase in exposure to shares due to “almost zero” profits in recent months. Likewise, variable income is the majority choice among millionaires. In this way, they can join one or dozens of companies without the need to be a part of the business activity. According to data from Wealth Solutions, equities make up about 33% of the highest-yielding investments. The youngest favorite industries are technologies and startups, Verdaguer adds, because “they’ve always lived with them and produced wealth in these industries.” More mature investors prefer pharmaceuticals, energy or finance. They are also aware of “mega-trends” such as robotics or hydrogen, according to Federico Servetto, director of strategy for private banking clients at Banco Sabadell. Those who decide to invest in private equity – companies that are not listed on the stock market – should contribute around 50,000 to 350,000 euros and within 10 or 15 years will have the payoff of leaving their money there.

Traditionally, the real estate sector or real estate has been one of the most common investments in Spain, especially for the most senior. Billionaires buy offices, shopping malls, industrial buildings and data centers as well as rental apartments. While they earn rental income in the short term, they earn revaluation in the long term. While they don’t stop there, they also invest in infrastructure such as roads, highways, hospitals, railroads or ski resorts.

Raw materials constitute a small part of these investments. “Interest in commodities has grown tremendously, with inflation aggravated by the war in Ukraine and disruptions in value chains,” explains Marta Raga, director of discretionary portfolio management at Singular Bank. Despite this, they still do not play a significant role in investors’ portfolios.

Alternative investments

According to CaixaBank sources, “You can diversify more by owning more assets, combining less traditional investments and, in some cases, giving up their liquidity.” An elite group of the wealthy even own vintage cars, works of art, or vintage musical instruments as a haven for their money. On the other hand, there are investments that start out as a little exotic and become trending, such as marijuana, the metaverse, crypto-assets or biodiversity. “There is also a lot of interest in productive rural farms that not only allow them to be exploited but are also valued for their sustainability and low emissions,” Servetto adds. According to Forbes, cryptocurrencies have created 19 billionaires in the world, but they have also reduced the capitalization of many of them. Its speculative nature means that high-net-worth individuals do not receive a large portion of their investment. The rich, with all the alternatives, expect their capital to appreciate on average between 5% and 8% per year, something that is difficult for many to achieve.