Money secret No. 21: How do rich people invest?

Very wealthy people invest wisely. They came to understand early on that money works for them. There are a few things you can pick up from them, such as the core-satellite approach. The core is the central part of the investment, and the satellites are the additional pieces. Wealthy people build a core investment portfolio out of stocks and bonds and then invest in satellites, so to speak, as the icing on the cake. Satellites can be, for example, real estate or other types of investments such as venture capital (investment in startups) or private equity. These types of satellites are sometimes very illiquid and require a large initial investment. The most appealing part about them is that you can pivot at will. You might build a core portfolio of exchange-traded funds with stocks and bonds and then buy a small house as its first satellite.

More tips that come from very wealthy people:

·     Pay yourself first. Don’t forget to put money aside for investing at the beginning of every month. The rich get richer because they do exactly this, consistently and diligently. And you can do it too!

·     Set yourself clear goals from the start. How much wealth do you intend to have by a certain point in time? What are the first steps?

·     Learn about new assets. As soon as you have built a core portfolio out of stocks and bonds, think about which other asset classes you could invest in. For example, there are platforms that allow you to invest in startups with a smaller initial investment amount. You could also study up on cryptocurrency.

·     Stick to one strategy – that strategy being to not get nervous when prices fall. Remember what we said about not selling when stock prices fall? You need a long-term strategy…and you have to stay with it.

Money secret No. 21: Think about what advice of the wealthy you want to latch onto. And then put it into action…right now.