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As we move into the new year, it’s no surprise that what’s on many people’s minds is a consumption theme in the second half of 2021: Inflation soars.
Give extremely rich, rising inflation actually plays a big part in how they choose to invest in the new year.
Michael Sonnenfeldt, president and founder of TIGER 21, a peer-to-peer learning network for investors and entrepreneurs with a personal net worth between $10 million and $1 billion.
Through the Daily Investor Certainly not millions of dollars as their name suggests, there could be ways to replicate how the rich allocate their money, especially in light of ongoing inflation fears affecting us all. Here’s how the ultra-wealthy members of TIGER 21 are investing in 2022.
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1) Build an inflation-resistant portfolio
Members of TIGER 21 believe that inflationary pressures will be permanent, not temporary. In fact, 65% of members expect inflation to accelerate next year.
As a result, they are allocating money to some of their favorite investments to protection against inflation, As if:
- Real estate, such as industrial real estate and apartment buildings
- Public stakes, or shares, in pricing platform companies (platform companies are the likes of Amazon, Apple, and Airbnb), consumer staples, and streaming services line
- Cryptocurrencies (learn more about this in #2 below)
When you look at real estate as an example of an investment to hedge against inflation, it’s not just property reserved for the rich. In addition to home ownership, real estate investing can be done through REITs (also known as Real Estate Investment Trust). REIT is a company that invests in different types of income generating real estate (shopping malls, condominiums, housing developments, hospitals, garages, etc.). You can buy REIT stock to gain access to its real estate investments and add that property to your portfolio without actually managing the property yourself.
You can invest in publicly traded REITs through any brokerage account, like honest, TD Ameritrade and Robin Hood hero, while companies prefer Fundrise, Yieldstreet and Raise money allows you to buy shares in your own non-publicly traded REITs through their platform.
2) Double their crypto investment
As an alternative to investing in gold to fight inflation, TIGER members have doubled their investment in gold. electronic money.
TIGER 21 members are placing their coins specifically in ethereum (34%), bitcoin (33%), crypto funds (23%), other coins (15%), and dogecoin (2%).
These wealthy investors are certainly not wrong. Bitcoin is often described as “digital gold” and should theoretically protect against inflation because of its limited supply, but it is not yet known if it is a good long-term inflation hedge. or not.
Of course, everyday investors can also invest in cryptocurrencies thanks to financial apps that make this easy. Cash App, a peer-to-peer payment service run by Square Inc. ownership, only allowing users to buy bitcoins. PayPal allows users to buy four different cryptocurrencies: bitcoin, ethereum, bitcoin cash, and litecoin. Users who hold crypto on PayPal can then also use it to pay on the app.
Robin Hood hero, the Mobile application for stock investment, which supports seven cryptocurrencies for users to purchase, including the popular dogecoin meme cryptocurrency. And personal finance providers, SoFi, which allows the purchase of 21 different cryptocurrency coins and tokens through its application. If you want more control over your cryptocurrency and own it directly, Coinbase provides a platform to buy, sell, swap, store and deposit more than 50 cryptocurrencies.
3) Increase investment in alternative energy
Electric vehicle stocks are still hot investments, and the super-rich are pouring more money into companies like Tesla, Rivian and Lucid.
Tesla stock isn’t cheap, but you can still gain exposure to the electric car market by putting your money in ETF invests in many electric vehicle related companies, such as Global X Autonomous & Electric Vehicle ETF (NASDAQ: DRIV) or self-driving iShares EV and Tech ETF (NYSEMKT: IDRV). This is a broader and less risky approach to investing than buying individual stocks.
Key point
It’s interesting to see how the super-rich are investing to head into a new year with soaring inflation. Since this is in the interest of every investor, it is helpful to keep a record of what they are doing to hedge against inflation.
The lesson here is that you don’t need to make millions more to protect your money in the market.
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Editing notes: The opinions, analysis, evaluation, or recommendations expressed in this article are the sole opinions of Select’s editors and have not been reviewed, approved or endorsed by any third party.
