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(2023) 7 High Net Worth Investing Strategies You Can Start Now

High Net Worth Investing Strategies

Are you looking to do something more besides the ol' dollar-cost-average investing strategy?

While hard-and-fast investing rules do good for everyone (balancing your portfolio, diversifying assets, and long-term investments), as a high-net-worth investor, you've got some valuable and rare-opportunity alternative investments on your plate to help grow your wealth even more.

At Wisesheets, we're going to share seven high-net-worth investing strategies you can start implementing as soon as possible to help you make the most of your money.

Ready? Let's go.

What is 'high net worth investing'?

Individuals considered high net worth investors (HNWI) typically have a liquid net worth of more than $1 million. This could be in the form of cash, stocks, investments, and other assets.

But even in the high net worth zone, there are levels to it, according to Forbes: Very high net worth individuals (VHNWI) own liquid assets between five and thirty million dollars, and Ultra high net worth individuals (UHNWI) own more than thirty million dollars of liquid assets.

High net-worth individuals often have different investment goals and objectives than the average person. For example, they may be looking to preserve their wealth, grow their assets at a higher rate than inflation, or create additional income streams. Because of this, high-net-worth investors often have access to unique opportunities and strategies that aren't available to the average person.

Now that we've got that out of the way, let's get into the strategies.

1. Start with a comprehensive financial plan

The first step for any high-net-worth investor is having a clear and concise financial plan. This will help you map out your short-term and long-term investment goals, as well as give you a better understanding of your overall financial picture.

You should include the following to have a comprehensive financial plan:

  • A detailed analysis of your current assets and liabilities
  • An investment policy statement that outlines your risk tolerance and investment goals
  • A retirement plan that accounts for both traditional and non-traditional sources of income
  • An estate plan that includes a will, trusts, and other legal documents
  • Tax planning strategies to minimize your tax liability

You'll want to thoroughly discuss your personal and family values and goals when it comes to wealth and its management. Then, make an accurate and reasonable financial forecast based on the current state of your finance and carefully consider expert recommendations on investable assets so you can weigh all your options.

2. Strategic philanthropy: Save on taxes as a do-gooder

As a high-net-worth individual, you have the ability to make a large impact with your philanthropic giving. You can give more money, more thoughtfully, and with greater strategic planning than someone who is working to earn a living and provide for their family.

One of the best ways to approach philanthropy is to consider it an investment. Remember that charity donations are tax-deductible, so they can help you lower what you owe to the government.

You can also look into ways to leverage your philanthropic giving so that it has a greater impact. For instance, you could start a donor-advised fund which allows you to make charitable donations that are then invested and grown over time. Or you could set up a charitable remainder trust which provides an income stream for you while also benefiting the charity of your choice.

Instead of simply writing a check to your favorite charity, take some time to do your research and figure out which organizations are most aligned with your personal values and goals. Strategic philanthropy is a great way to use your wealth to make a difference in the world, and it can also be a lot of fun.

3. Hedge funds: An alternative investment

Hedge funds are an alternative investment that can be a good option for high-net-worth individuals since they often require minimum investments of at least $1 million. However, they're typically only available to accredited investors, which is someone who meets certain income and asset requirements set by the Securities and Exchange Commission (SEC).

Hedge funds are not subject to the same regulations as traditional investments like stocks and bonds. They're often actively managed, which means that the fund manager is constantly making decisions about where to invest the money. This can make them riskier, but it also means that they have the potential to generate higher returns.

There are different kinds of hedge funds like:

  • Long-short funds: These funds bet on some investments going up in value while others go down.
  • Event-driven funds: These funds take advantage of special situations like bankruptcies or corporate restructurings.
  • Global macro funds: This is where you invest based on global economic and political trends.
  • Market-neutral funds: These funds aim to generate returns regardless of whether the stock market is going up or down.

If you're thinking about investing in a hedge fund, be sure to do your research and talk to a financial advisor first. It's important to understand the risks before you commit any money.

4. Private equity: Invest in pre-IPO companies

Imagine if you could have invested in FAANG stocks like Google or Facebook when they were first starting out. Wouldn't that have been sweet? Nothing screams high net worth investment like being an early investor in a now-huge company. Alongside finding undervalued public stocks, with private equity, you're investing in a company with high potential that isn't listed on the stock exchange (yet).

While you might not be able to invest in the next Google, you can still put your money into pre-IPO companies through private equity funds. These are investment vehicles that allow you to pool your money with other investors and get access to a portfolio of private companies that are not listed on the stock exchange.

The key is finding a reputable private equity firm with a good track record. Doing your due diligence is important because these investments are not regulated by the SEC, and there's a lot of potential for fraud. But if you choose wisely, investing in private equity can be a great way to get access to high-growth companies that are not yet publicly traded.

Of course, there are risks involved with investment strategies like private equity as well. The company may never go public, which means you could lose your entire investment. And even if the company does go public, there's no guarantee that it will be successful.

Still, private equity can be a good option for high-net-worth individuals who are willing to take on some risk in pursuit of higher returns. If you're interested in investing in private equity, you can do so through a private equity firm or by investing in a venture capital fund.

5. Tax-free municipal bonds: A safe investment

When you're playing in the major leagues, keeping your tax bill under control is crucial.

Municipal bonds are debt securities issued by local governments to finance projects like new schools or roads. They're often called "munis" for short. Investing in municipal bonds can be a good way to generate income without having to pay taxes on the interest you earn. That's because the interest from municipal bonds is exempt from federal taxes and, in some cases, state and local taxes as well.

Municipal bonds are considered to be a relatively safe investment since they're backed by the full faith and credit of the issuing government. However, there is some risk involved since there's always the possibility that the issuer could default on the bond.

If you're in a high tax bracket, investing in municipal bonds can be a good way to boost your income without having to pay a lot of taxes. Just be sure to research and talk to a financial advisor before investing.

6. Testamentary Trusts: Another way to minimize taxes

A testamentary trust is an irrevocable trust that's created when you die. It's often used as an alternative investment strategy to minimize estate taxes and ensure that your assets are distributed according to your wishes.

With a testamentary trust, the trustee (the person who manages the trust) can use the assets in the trust to pay for your funeral and other expenses related to your death. The trustee can also use the assets to support your spouse or minor children. Once your spouse and children reach a certain age, the trustee can distribute the remaining assets according to your instructions.

If you're looking for a way to minimize estate taxes, a testamentary trust can be a good option. Just be sure to talk to a financial advisor or estate planning attorney before you create one.

7. Build & track a vast, diversified portfolio

While there are a lot of different ways to invest your money, we can't forget that one of the best is simply to build a diversified portfolio of traditional asset classes and hold onto it for the long term. Since your cash is in the millions, it's particularly easy for you to evaluate and invest in a wide range of assets, including stocks, bonds, real estate, and more.

It's tempting to try to time the market by jumping in and out, but that's often a recipe for disaster. Instead, it's better to invest in a variety of assets and let time do its thing. 

Remember, it's important that you keep tabs on your portfolio and assess its health regularly if you want to make the most of your money. With a tool like Wisesheets, you can tap into pre-made stock analysis templates like DCFs, stock watchlists, screeners, and fundamental visualization all in one click to help you make informed decisions about your investments (which update stock data in real time).

DCF template Excel

Related: How to Compare and Analyze Stocks in Excel: The Definitive Guide


So there you have it! Seven high-net-worth investing strategies that you can start using today. Of course, this is just a starting point. If you're serious about growing your wealth, be sure to talk to a financial advisor about the best way to invest your money.

To your investment success!

Guillermo Valles
 | Website

Hello! I'm a finance enthusiast who fell in love with the world of finance at 15, devouring Warren Buffet's books and streaming Berkshire Hathaway meetings like a true fan.

I started my career in the industry at one of Canada's largest REITs, where I honed my skills analyzing and facilitating over a billion dollars in commercial real estate deals.

My passion led me to the stock market, but I quickly found myself spending more time gathering data than analyzing companies.

That's when my team and I created Wisesheets, a tool designed to automate the stock data gathering process, with the ultimate goal of helping anyone quickly find good investment opportunities.

Today, I juggle improving Wisesheets and tending to my stock portfolio, which I like to think of as a garden of assets and dividends. My journey from a finance-loving teenager to a tech entrepreneur has been a thrilling ride, full of surprises and lessons.

I'm excited for what's next and look forward to sharing my passion for finance and investing with others!

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