Portfolio Reached $500,000? What Should You Consider?

Image provided by Masterworks

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice. 

Once your portfolio reaches $500,000, your priorities could likely change. Many advisors suggest you diversify your portfolio at this stage to help reduce risk. 

But with the highest inflation rate in nearly 40 years, volatility is at an all-time high, and equities are experiencing a correction, should investors get into the equities market? Many high net individuals are looking elsewhere these days. Here are a few of the things they’re looking at. 

Most savvy and rich investors diversify with this alternative asset

The ultra-wealthy understand that physical assets like commercial real estate, gold, and even artwork, can help balance out the volatility of stocks. 

That’s because alternative assets often have little correlation to the equity market. That means these assets may not be as susceptible to market swings, high inflation, or temperamental volatility. 

An asset that stood the test of time

Recently, the ultra-wealthy have been stocking up on one particular alternative asset. The Rothschilds sold the overlooked asset for over $197 million to the Dutch government. Oprah Winfrey sold this same asset for $150 million (grossing $62 million). And Jeff Bezos recently sold some of his Amazon stock to buy $70 million worth of this asset.

Most people wouldn’t think of it, but I’m talking about art as an alternate asset class. According to UBS, 73% of ultra-high net worth Americans considered buying art to diversify their portfolio, for some reasons: art & collectibles is a $1.7 trillion asset class that’s expected to grow 58% in just 5 years, according to Deloitte. Contemporary art prices outpaced S&P 500 returns by 164% from 1995 to 2021. And Contemporary art appreciates 23.2% on average when inflation is at least 3%.

With Masterworks (the biggest art investment platform) you can buy shares representing an investment in artworks. That gives you the opportunity to invest in this overlooked asset alongside Brad Pitt, Beyoncé, and Leonardo DiCaprio for a fraction of the cost.

See important information

Real Estate is appreciating in value

One of the wealthiest Americans in history, Andrew Carnegie, said "Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined." And due to recent events, real estate has been rising in popularity.

According to the Federal Housing Financing Agency, most home prices increased more than 18% in 2021. And in 2022, some analysts believe it will rise higher.

While you could invest in real estate the traditional way (buy, hold, sell), you can also invest in REITs just to gain some exposure.

Or you can participate in real estate deals with alternative investment platforms, which allows you to get in deals for as little as $10 to start.

Farmland is not widely known as an asset

In 2020, Bill Gate became the largest private farmland owner in the U.S. He accumulated more than 269,000 acres of farmland, some of which even grow potatoes that are used to make McDonald’s french fries. And Gates' friend, famous investor Warren Buffett, also had said before that while not the norm, one of his farmland investments had “tripled its earnings and is worth five times or more than what I paid.”

Investors will need to do their diligence because of the variety of farmlands out there, and every investment includes risks. But some investors believe farmland is an attractive investment because of its low volatility, low correlation to other assets, and a potential hedge against inflation. According to the USDA, farmland produced a positive return every year since 1991, with an average annual return of 11.5%.

Investors may think that purchasing farmland is out of the question for them. But with crowdfunding, it's possible to own farmland without the need to maintain it or know all the intricate details of growing crops.

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.