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Featured Advisor

Srbo Radisavljevic
Managing Principal/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, following Chicago sports, enjoying ethnic cooking, and serving as a school board member for Norridge School District 80.

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Wealth Building Strategies of Ultra Affluent Investors

Ultra affluent investors seek more than traditional stock, bond and cash products. What wealth building strategies set them apart from less affluent investors?

| BY Adriana Reyneri

The vast majority of affluent investors own traditional stocks, bonds and cash accounts, according to Millionaire Corner research, but the very richest set themselves apart by employing a wider range of wealth building strategies.  

What are the wealth building strategies that distinguish the most affluent investors? A recent Millionaire Corner study, $25 MillionPlus Investor 2012, shows that the richest Americans own the same types of investments as Main Street households, but tend to consolidate their wealth through real estate ownership. And, build their wealth by investing a portion in riskier alternative investment products.

Real Estate

Real estate ownership generates an average of $1.2 million in annual income for the average $25 million plus household and is their third largest source of income. In addition to earnings, real estate can serve two other wealth building strategies, hedging against inflation and minimizing the tax consequences of investments.

More than 90 percent of $25 million plus investors own their primary residence, and the average value of their home exceeds $3.7 million. More than 70 percent own a second home with an average value of close to $2.9 million and 46 percent own a third home, this one averaging roughly $2.6 million.

A significant share of $25 million plus investors own undeveloped land (44 percent) with an average value of $2.9 million, residential rental property (41 percent) with an average value of $3.2 million, and commercial property (37 percent) with an average value of approximately $6 million. Close to 40 percent owns a Real Estate Investment Trust, or REIT, in which they’ve invested an average of $2.5 million. One third owns other types of real estate, and smaller percentages own time shares and vacation clubs. Additionally, an average of 19 percent own or partly own construction businesses, and 38 percent have a stake in a finance, insurance or real estate business.

Alternative Investment

Though $25 million plus investors are generally moderate risk takers, nearly three-fourths (74 percent) set aside a portion of their assets for more speculative wealth building strategies. Many of these strategies fall into the category of alternative investments, which offer the potential for above-average returns as well as a high level of investment risk.  Many alternatives are off-limits to retail investors, in keeping with federal laws designed to protect unsophisticated investors lacking the resources to withstand a catastrophic loss.

More than half (55 percent) of $25 million plus investors own private equity with an average value of roughly $3.4 million. Close to half (47 percent) own hedge funds with an average value of $2.8 million, while 46 percent have invested an average of $3.8 million in limited partnerships, and 45 percent have invested venture capital for an average amount of $4.4 million. Close to 40 percent own precious metals for an average of $3.1 million. Roughly one-third owns commodities and options, while roughly one-fourth owns futures, structured notes and collateralized debt obligations.

To learn more about the wealth building strategies of affluent investors see our related story on risk, diversification and taxes.