Anyone who hopes to build wealth should start by looking at those who have already done it — and learning everything they can from them.
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Most billionaires (70%) are self-made, according to the Billionaire Ambitions Report by UBS released in late 2024. Among more commonplace millionaires, even more, are self-made, with only 11% having inherited any money per Northwestern Mutual.
In other words, they aren’t airhead heiresses. They’re masterful with money, and they’ve proven it by beating the market over the last decade.
Here’s what you can learn from them and apply to your investing strategy.
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Billionaire Investing Performance
The UBS report found that billionaires grew their wealth by 121% over the decade from 2015 to 2024. Specifically, they grew their assets from $6.3 trillion to $14 trillion.
For context, global equities grew by 73% over that period, as measured by the MSCI ACWI Index. The S&P 500, which has outperformed nearly all other countries’ major stock indexes, grew 77%.
So what are billionaires investing in?
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Billionaires Prefer ‘Alternative’ Investments
Over the last decade, billionaires have disproportionately invested in real estate, private equity, and precious metals. For instance, a 2021 report by global investment firm KKR found that the more money investors had, the more they tilted their asset allocation toward these “alternative” investments, with ultra-high net worth investors putting nearly 50% of their portfolio there. In contrast, they only put around 30% toward public equities.
That trend has continued since. In the latest UBS report, 43% of billionaires reported that they plan to increase their real estate investments in the coming year, compared to just 19% who plan to reduce their exposure.
Of course, most billionaires aren’t buying single-family rental properties and becoming landlords. They invest passively through private partnerships, real estate syndications, and private equity funds. The wealthy also invest in property-secured debt, in the form of private notes or real estate debt funds.
How has this helped billionaires beat the stock market? A report by the Wharton School at the University of Pennsylvania found that private equity real estate historically aims for 16-20% returns.
Where Billionaires See the Greatest Opportunity
Four out of five (80%) of billionaires see North America as offering the greatest opportunities and returns over the next year. Extending the telescope a little further, most (68%) still see the most opportunity in North America over the next five years.
That’s great news for not just American workers, but also U.S. stocks and real estate investments. While it’s easy to buy international stocks with the click of a button, it’s harder to buy overseas real estate. That goes for passive real estate investments as well, not just direct ownership.
What Worries Billionaire Investors
The UBS report found that billionaires cite geopolitical uncertainty as their greatest worry. Over 6 in 10 (61%) say they see geopolitical conflict as a major risk.
Billionaires also cited a global recession (53%) and a debt crisis (46%) as major threats. Additionally, they remain worried about inflation fears (39%) as a threat to both their investments and the economy at large.
To address these concerns, 40% of billionaires plan to increase their precious metals holdings. Compare that to just 4% who plan to reduce them.
How You Can Invest Like a Billionaire
First, you better believe that billionaires max out their tax-advantaged accounts such as IRAs and 401(k)s. Take a second look at any tax savings you might be leaving on the table.
Regarding passive real estate investments, you too can invest in syndications, private notes, and to a lesser extent private equity real estate funds. The SEC makes it difficult for middle-class investors to access many of these, restricting many to wealthy accredited investors. However, you can invest in syndications that are registered as 506(b) investments.
I work in this space myself and have had positive experiences with Post Real Estate Group, MAG Capital Partners, Freeland Ventures, and DJE Texas. All allow non-accredited investors in many of their passive real estate investments.
Another challenge arises from the high minimum investment, however. Most private equity real estate investments require at least $50,000 or $100,000. I personally get around this by organizing an investment club for passive real estate investments, so I invest $5,000 at a time. That makes it easier to diversify across many investments.
As for precious metals, you don’t have to install a safe behind your office wall painting. You can simply buy shares in funds that own metals, or you can buy them directly through platforms like Monetary Metals which go so far as to offer gold leases so you can earn income from your metals.
You don’t need to be a billionaire to invest like one. You do need to get comfortable investing outside paper assets like stocks and bonds.
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This article originally appeared on GOBankingRates.com: How Billionaires Have Beaten the Market Over the Last Decade (and What You Can Learn From Them)
