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BARCLAYS US EQUITY INSIGHTS -> TOP 5 QUESTIONS WE'RE HEARING... (Full Note)
Barclays US Equity Insights -> OP FIVE QUESTIONS WE'RE HEARING... (Full Note)
Timing of price fluctuation when very large trade orders occur
I Interviewed 20 Leading Wealth Management Firms: Here Are All Their Strategies
Buy, Borrow, Die. Gotta understand how hedgies or ultra HNW play the game. Why they can keep borrowing money, or (shares to sell-short). It's easy to borrow money if you are already rich
I Invested In ABML At 12 Cents, Here's My Next Play - CRBTF (First Publicly Traded DeFi Company)
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Hi. That's exactly the products we are presently selling Autocallable structured products with gold as the underlying. To HNW clients with a need of Fixed income 8% p.a with observation half yearly . Also non Autocallable products capital guaranteed return at maturity. At gold 5,600$ many of my clients were 70% up . We are very bullish and see gold hitting 6,000$ -7,000 before maturity. Thanks for your reply and for sharing genuinely valuable insight!
**Ex-derivatives trader here.** You are the only person on this sub who actually understands "Market Plumbing." Most people look at the chart and see "Fear." You looked at the Open Interest and saw "Liquidation." You are spot on. I want to add one layer of institutional nuance to your **"Structured Products"** point, because that is the hidden engine of this $600 drop. **The "Autocallable" Effect (The Asian Whale)** You mentioned banks selling capital-guaranteed products. Specifically, Asian and European wealth desks have been selling massive amounts of **"Autocallables"** or **"Accumulators"** on Gold to HNW individuals. * **The Structure:** The client sells a Put (implicitly) to finance a Call spread. * **The Trigger:** When Gold dropped through that key support (likely the $4,800 spot level), it triggered **"Knock-In" barriers.** * **The Dealer Reaction:** When a Knock-In is hit, the dealer suddenly goes from "Neutral" to "Massively Long Delta" (which they don't want). To hedge this new long exposure, they have to **Sell Futures aggressively.** * **The Result:** Your "Gamma Flush." The lower it goes, the more barriers get hit, the more futures they *must* sell by contract. It is a programmed crash. **On your GLD $455 Level:** We see the same thing on the desk. * **$455 (approx $4,860 Spot)** is the likely **"Gamma Flip"** zone. * **Below $455:** Dealers are in "Negative Gamma" (Short Gamma). They sell rips and sell drops. (Volatility Expands). * **Above $455:** Dealers flip to "Positive Gamma." They buy drops and sell rips to hedge. (Volatility Dampens). You are right: If we reclaim $455, the Dealer flow flips from a headwind to a tailwind. Great analysis. Ignore the "Bitcoin Rotation" noise. It’s all Greeks.
Based on your description seems like they plan to dilute shares to HNW individuals. Will dig deeper. But form me the best game is NMG from Australia. Go to their webpage and do some reading.
I’ve posted this question in other subs and most of the level headed comments I’ve received are similar to yours. I too am a long term investor (all be it a “new” investor) of some means but not a HNW individual. I’m worried but not frantic enough to do anything drastic. I’m just asking this question to see if there are any strategies from HNW individuals that a little guy like me can employ too.
Well, I don't know about Ultra-HNW individuals, and I'm sure they have their strategies, but speaking as long-term investor of some means, I would do absolutely nothing. Even with a 70% decline, the tax consequences of selling long-term holdings would be severe, not to mention foolish (in fact I'd take the opportunity to purchase more stocks). Since I live frugally there would be no lifestyle change. And if the U.S. economy collapses, the crisis would wreak havoc on the entire global economy. .
I agree that it doesn’t necessarily mean the lower tiers of society are doing great since they bye and large don’t own stocks. I tend to disagree about your 1% comment. More like the top 50% have equities. But the higher you are on the ladder the better you’ve done. I also think this is the same as it always has been. When the economy is booming it’s always those most exposed to it that benefit the most like business owners and HNW individuals. If you are barely making a living working as a security guard I don’t think the market or economy doing well or badly matters too much for you.
That's direct indexing. Most often used by HNW investors.
EJ actually has access to some alts if you have over 10 mil. But this is a good time for you to negotiate your fee. Ask for a 20% discount, the UMA program if you can, and a full financial plan for free. If the situation is ultra complex which it doesn’t sound like it is, they have something called the client consultation group which is a team of SMEs that will work along side of the advisor. EJ has done a decent job of increasing HNW services.
1) it's not just some people, read my post again. most people don't know what they are doing. 2) people always had access to resources on the internet. the advice hasn't really changed in 20 years since i've been on forums. even with "help" people receive worse advice than 20 years ago because less professionals are posting and amateurs are telling people who have lower risk tolerances to buy S&P500. there's literally personal finance terrorists on the internet 3) again.... read my post. yes i provide higher value to HNW clients vs. smaller clients. The difference is avoiding 7 figure mistakes vs 6 figures. i've already seen it and lived it and reviewed cases from firm partners from the 90s and early 2000s. we've had an amazing 15 year bull run but who knows if it will keep on going. if we have another lost decade (or sub 10% ror) i really wonder what is going to happen to those buy and hold XEQT people. what i do remember over 20 years, amatuers on forums would just say overweight whatever did best. it rotated between overweight nasdaq, then canada, then emerging market, and now spy or nasdaq again. people will highlight whatever had the best 5 year return.
Once you have enough money you can start using "buckets". You might want to look at some other options. Schwab and fidelity's financial consultants begin at $1MM. Different wirehouse advisors can differ, but they are either solo practitioners or teams - team's minimums are usually larger. I personally know people at Capital Securities, a Raymond James affiliated firm. You also have private banks. They are built for HNW advisement. My neighbor from across the street in HS is in BofA private bank (3MM min) as a wealth manager. PNC private bank does 1-3MM min. JPM Private Bank bigger at $5MM min. My nephew did a stint as Goldman Sachs supporting family offices. Private banks can handle trust administration. If you have made it into the "qualified investor" ranks there are some robust alts offerings. They can have proprietary strategies, can help you set up specific entities, can help with charitable gifting and foundations, can help you tax loss harvest, and can handle lending in house. The only thing that Private banks won't advise directly on is taxes. There are absolutely benefits to this, dont listen to everyone on this sub who tell you otherwise. For some reason, these ultra wealthy people are massively represented by these institutions, even against the advice you'll get here. There is also the DIY route. Learn about trend following, and then just bucket out the money for the sector ETFs and risk capital. Plan on regularly blowing up bits of risk capital. But the upside is a stock like NVDA. The last three years have been a "living the dream" landscape. Hope this helps.
Yes, there are differences. Everyone in personalfinance hates Financial Advisors, but the truth is that they can add value. There are platforms built around HNW wealth advisement. Examples: Schwab and fidelity's financial consultants begin at $1MM. Different wirehouse advisors can differ, but they are either solo practitioners or teams - team's minimums are usually larger. You also have private banks. They are built for HNW advisement. Its not about beating the market at this point, its more about strategies, and handling everything in house. Examples - BofA private bank (3MM min) PNC private bank )1-3MM min) JPM Private Bank ($5MM min). Private banks can handle trust administration, usually have robust alts offerings, have proprietary strategies, can help you set up specific entities, can help with charitable gifting and foundations, can help you tax loss harvest, and can handle lending in house. The only thing that Private banks won't advise directly on is taxes. There are absolutely benefits to this, dont listen to everyone on this sub who tell you otherwise. For some reason, these ultra wealthy people are massively represented by these institutions, even against the advice you'll get here.
HNW/UHNW/VHNW uses margin and SBLOC extensively
HNW is usually 1 million and Ultra High Net Worth is 10 or 30 million. At least for Schwab, JPM, and Fidelity at least
HNW people use leverage/arbitrage, they just (generally) do so wisely.
5 years ago you'd only hear the same 3-4 names here (and they are still dominating the wallet share of older HNW folks), but the gap between legacy brokers and newer platforms is much smaller than it used to be. A lot of HNW DIY investors are rethinking what they actually need and are increasingly turning toward newer all-in-one players (Public, Robinhood, WeBull) because they offer modern UIs, smoother workflows, and often lower or more transparent fees - plus increasingly robust product access (not just basic stock/ETF investing anymore). IBKR / Fidelity / Schwab are still common, especially for certain cases (global access, specialty products/funds, etc.), but it’s no longer “legacy or bust.”
Most HNW traders I know use Think or Swim. Second is Fidelity. Think or Swim is much better but a lot of people accumulated a lot of wealth from 401k plans, stock options and employee stock with their companies using Fidelity to manage those plans. So they use Fidelity because that's what their companies use.
I like the strategy, I have an HNW friend who does the same thing with VOO at 1.7x and I personally run 1.2-1.5x on high-beta stocks as an active trader. Question about drawdowns - you got through 2022 by deleveraging to 1.9x preemptively in 2021. What do you do in a 20% correction that you don't anticipate? Accept every IBKR automated liquidation to bring your excess liquidity up to 0?
Thanks for this, its helpful to have your honest views on this and certainly food for thought. It's actually REALLY interesting. So I'm actually from Jersey 🇯🇪 You mentioned it is BVI company HQ in Jersey. Weshop was purchased by a HNW in Jersey from the UK hence mind and management here. It's a BVI company, but many private wealth vehicles (which this was) were historically setup in BVI which is quite common, so not as fishy as it might seem. So not a SPAC, but yes a Special Purpose Vehicle. The financials definitely don't make for good reading and blow ratios like P/E out of the water, but have to be read in the context that this basically a capital hungry VC start up over the past few years whilst trying to IPO. Heavy on marketing (athletes / influencers etc) in the early years for brand awareness and acceptance. I've been watching it for a few years (as I said above I've been USING the app). So I think its unfair to call it an insiders dumping scheme, but I can see why you might say that. The 12 month share maturity time-frame is to stop users making purchases, getting shares, then returning goods / receiving refunds. Which might better explain that aspect. Thanks for looking into it. One thing I dont understand, is who's buying into it? At that price... Surely its the anticipated growth that is priced in there? They are looking to launch in the US, so perhaps that's the thinking?
For full transparency I’m in an advisory like role at Charles Schwab, my opinion on advisors who deliver only ETF portfolios is quite poor. Schwab’s business model allows someone like myself to help self directed investors outside of providing specific buy/sell recs. While my role is to educate clients on general topics I only bring management into question if I see a need like for example a bond ladder, tax loss harvesting, banking products, for HNW individuals we have teams that work with them on their tax strategies and estate planning. So a little salesy but I believe it’s doing so as a fiduciary. For example being in MA someone starting a family and find a need to set up a 529 I typically reroute them to Fidelity for the tax advantages. Only when it’s like 3 years away from college I let them knows Schwab’s 529 won’t provide deductions but if they want to consolidate the accounts at Schwab then open it because they won’t get marginal benefits from taxes since there’s a short runway but still say Fidelity will provide them with deductions. Every advisor will say they do financial planning, but you will find advisors that are either really charismatic or who are very technical. There a few that are nice middle ground and will actually be valued. End of the day my opinion is you only need management once you’re approaching $1MM in investable assets. I might get chewed out for it but that’s my personal opinion.
Advisors arent worth paying for unless youre HNW or UHNW. Its just not complicated. Buy index funds and have an accountant do your taxes. Now mail me a check for 2% of assets under management each year.
Cool post, but a couple of considerations: ELTIFs arent private equity funds - they're mosting investing in infrastructure. ELTIFs arent derivatives. Its a direct investment fund with limited splash of Fund of Fund activity. The size of ELTIFs is small... too small to be a problem. ELTIFs are designed for institutional and HNW investors, not banks. Synthetic CDOs are CDOs of CDS contracts on other CDOs. ELTIFs not able to own CDS, so the comparison is disingenuous. According to you, they also cant even have CDS backing them - which is a good thing (if SHTF, then there is limited risk of contagion).
It's one of the perks you get with their financial management services (arguably one of the biggest ones). Their research and recommendations is one of their biggest offerings in attracting HNW individuals from other firms.
This would be a situation where I would talk to a professional. You can look for a fee only one. In reference to whether you get a step up in basis on death, there is a difference in tax treatment between taxable vs retirement accounts. You can also look into whether there are exchange funds that take crypto related assets. There are also funds like AQR and Quantinno that generate capital losses on paper that can help offset taxes. You need to talk to a professional. Most people on /r/investing are not familiar with HNW issues.
The website you’re describing is an entire industry and a very large one at that. Retail investors can obviously run screens and filters to find investments but HNW and institutional investors are generally not going to find investments through the website you’re describing. The regulatory aspect of the industry would make this very difficult
Well that is incorrect... For commercial reasons, banks don't mind lending you cheap money if your funds are locked with them, and they manage your account, it's part of a package they do that for SW, family office, HNW, hedge funds, pension funds, AM... On the overall they don't consider it a lost because their fees offset in some other place but the loan can be cheaper then what they would get on " risk free" assets ( such as overnight fed...)
"This is just not true." It is absoultely true. Source: I work with HNW individuals. I don't think you realize how many of them have art, firearms, collectibles locked in a safe that no one ever sees. And that Aston Martin DB5 you think is to show off their wealth? It sits in the garage with a car cover on it.
I work at an RIA. Any idiot can work at an RIA, as I’m often reminded on this sub. Most RIAs don’t do what we do because it’s complicated and logistically risky. And most advisors are idiots. Answer your question, super easy. Get licensed and cut your teeth at a firm that specializes in servicing HNW and UHNW.
There are plenty of balanced mutual funds but balanced ETFs really haven't taken hold in a meaningful sense. One of the largest markets for ETFs is the instituational market (both formal institutions and HNW individuals with advisors) and balanced funds are not appealing to most institutional investors so there is limited incentive to create them.
L4 is going to be brokerage dependent... they all worried about uncovered calls and your ability to cover. I know Schwab, Fidelity, and Etrade look at your trading history and won't give you L4 or portfolio (test) immediately unless you're HNW.
Man, I was planning to become a HNW individual today. Hopefully tomorrow
Man, I was planning to become a HNW individual today. Hopefully tomorrow
This isn't anything new; if you have a pension, you are invested fairly heavily in private markets. Unless they are dropping the accredited investor standard, your average person isn't going to be able to invest directly into private markets with their 401k. This more than likely is the target so HNW can invest more into PE than your average joe. The only concern is that Private Markets have been pushing hard to get retail access, as the pipeline of institutional capital is drying up, since most are overallocated to the asset class.
Almost certainly not true. I can’t see why anyone HNW/UNHNW would use this over the better options they already have.
Honestly, you have to have an IQ of like 75 and the confidence of Mark Wahlberg. I cruise in a lot of HNW circles all the day traders literally eat crayons. That's why they are so good, when the average person hears NVIDIA is a market cap of 4 trillion we take gains and reallocate capital, these tards double down on super otm calls. What you don't see is the volitility in their lives one day their net worth is 20 million the next 2 million because they blew it on some emotionally charged trade. The reality is unless you are functionally retarded it is hard to outperform the major averages. If you have an iq abve 80 and any self-doubt your only success trading options will be long-dated atm calls on the spy and qqq. You don't have to listen to me, just pm me after you blow your account.
HNW here and I don’t have or use a financial advisor. Basic ETFs will get you in the region of 10% a year instead of 10% in 4 years
Appreciate this - super helpful. One thought though: Isn’t comparing Robinhood to Schwab or Morgan Stanley kind of like comparing WhatsApp to AT&T in 2005? RH isn’t trying to win HNW clients yet - they’re winning attention, daily engagement, and behavior. If the average customer makes more trades, refers more friends, and learns faster (especially with AI now helping), wouldn’t that change the value per user over time - maybe in ways legacy metrics don’t capture?
\- Far lower than healthy average account value. 25.8 Million "funded" accounts. $180B assets under custody and a market cap of $83B. That puts the average account value at less than $7,000. Nobody is fighting to take RH's customers, and that market cap represents a much higher multiplier than the rest of the sector. (As points of comparison: Schwab's average account value is over $200k (47.6 million accounts, $9.91T under custody, market cap of $166B). Interactive brokers is over 150k (3.62MM accounts, $573.5B assets, market cap of $98B)) ETrade was about $70k per account when it was sold to MS at a firesale price of $13B. TD Ameritrade was around $108k per account when sold to Schwab for $26B. Neither of those companies were "healthy", but both were putting up better numbers than Robinhood is today. \- In the financial industry, Vlad is not seen as a serious leader running a serious business. This may not be fair, but it's the perception. \- RH's customers are not sophisticated investors (see also: $7k average account value), and very few of them have been involved in a bear market. When the current market turns or corrects, they are going to get hit a lot harder than most other brokers' customers, and will be much more likely to close their accounts. \- RH does have a substantial GenZ and Millennial presence, but not among the folks who are most likely to become HNW or UHNW in the next 15-20 years (the young folks of means have their money elsewhere). The long-term value of these customers is questionable. RH will make more profit by encouraging more active trading, but there's no path to the (ultra-profitable) wealth management or trust management businesses. With that said, HOOD does trade more like a tech stock or meme stock than as a financial services company (and $120 is not out of the question, but probably not sustainable), but compared to the rest of its industry, it is already overvalued. I'm not buying, but I'm not shorting either. (Disclosure: I have no position in HOOD, though I do in MS and SCHW.)
#TLDR --- **Ticker:** TSAT **Direction:** Up **Prognosis:** Shares to $84 USD **Source:** My personal trainer's HNW client (who was also early on PLTR) **Catalyst:** Canadian government is backing them ($650M grant, PM is buddies with CEO). Debt negotiation is the main overhang; once that's settled by Dec 2025, uncertainty is gone and it's expected to rocket.
Archer's aircraft serve what purpose? The vehicle's range is not far enough to be useful other than for tour groups/entertainment. They can't operate in the segment of modern helicopters either. The cost of parking one of these at any FBO will destroy any operational profits from it being there. A HNW individual who wants a toy isn't going to buy something that can only fly a very short distance either. The only people who may want one of these (personally or commercially) is a person who owns multiple jets, gliders, etc and just wants to say he has one. You are talking 50 people on the planet. Any FBO that "partners" with Archer is just doing so as it costs them nothing. Archer would be a paying client of the FBO. So this PR is meaningless.
I highly recommend the OP talks with a tax professional before gifting or selling that particular stock. We do not know the OP’s tax situation. Gifting tax rules are different from cost basis carrying over. I deal with HNW clients so I deal with these types of situations on a regular basis.
##Tried to buy 3x leveraged NVDA on a HNW friends account I help manage. When I tried to buy it's like, no, no you can't do that moron. I see why rich people stay rich now.
i would love to see a statistic on the 'majority' of holders financial situation. i am of the strong belief that >75% of ACTUAL BTC holders are HNW individuals. owning 1/10th of a coin on Robinhood is not a bitcoin. im not here to say it wont drop, to be clear. i am still not entirely sure it isnt a long con...lol.
We're definitely in for short term volatility, but I don't expect it to last. Every dip fills out put side option chains with long retail positions... We can't expect market makers to just give the game away. Non-HNW retail must always lose on the whole for the market to grow. That's why underwriters cut off RH when hedge funds got market makers trapped short during the GME debacle. They needed time to source long shares to meet retail demand, and it served to throw some cold water on that demand. But mostly it ensured that the house didn't lose against retail on a large scale. If you really want to know where price is going you need to watch gamma exposure (aka the gex). That will tell you imminent max pain points re: gamma (the thing that moves delta) by showing you where market makers are meeting volume. Remember that 80-90% open interest must close otm. Extrapolate from there and you get something like an expected move +/- that tends to be pretty accurate.
Vast majority of trade volume comes from institutional - not retail - traders. And even within retail, it’s really only HNW people making any impact. The collective power of millions of retail investors coordinating on Reddit was able to…move a handful of small-cap meme stock.
Because you think like 99,9% of the people, and probably don't know any HNW individual. This isn't about money : it's about passion (it's the company he founded, his child) and having a purpose. Pro sports players don't want ton Being rich and not having any purpose isn't a good thing in the long run, trust me ;)
If the USA market collapses, most of the worlds markets will too. That said, probably you'll want to lean on either the EU (a risky bet that they too, won't fall to the far right?) and then Asia. I think countries like Singapore and Vietnam, and China would be the most cushioned since they have a combined large enough market and production to self sustain. Singapore more as a hideout for the HNW coming from China will leech off the wealth effect from there.
Nice job decoding those acronyms with an LLM. If you *actually* listened to that podcast (which I doubt you did given your degenerate trading behavior) you'd know the motivation to outsource, money management, investing, DCA, all are entirely driven by psychology, and decisions to manage HNW always have a psychological aspect. It's the same with the withdrawal phase and reallocation. It's also entirely the reason you tried to make a guru-minded post here You insinuating 6-figures could be misconstrued as flexing proves you know FA about HNW, period. Don't try and shift the goal posts, buddy Nobody said mindset is a prerequisite to net worth, you're confusing correlation correlation with causation. That's the amateur tell, along with all the other bullshit in your original post Also if you've never weighed up the option to buy and sell at the end of a lease versus the alternatives, you probably haven't been on this planet long enough to be giving anyone any advice. Thinking you could use that against me was moronic, compared to you who's a pennystock shilling scumbag Better luck next time xx byee
Reply: Right—The Compound, Josh Brown, asset delegation at the HNW threshold. I’ve heard the episode. The irony is, that segment wasn’t about mindset—it was about operational scale. Wealth management outsourcing ≠ detachment. It’s logistics, not psychology. And just to clarify again, I never claimed six figures was a flex. You brought that framing in, then argued against it like it was mine. If you think mindset requires net worth, you’re confusing exposure with composure. That’s the amateur tell.
It's even worse than that for him. His wealth is actually tied to loans tied to his stock value. It's how all of the HNW Millionaires and Billionaires do it. Look up Buy, Borrow, Die if you're unfamiliar with the concept. But for anyone who isn't. You have 1 billion Dollars in Assets. But you need to fund a 300 million dollar lifestyle. You can either sell 30% of your portfolio (and give up 30% control of your company via the loss of the stock voting power) OR you can take out a portfolio margin loan at 5% or whatever for 300m backed by the stock as collateral. The upside is that if the stock grows by 10% and you only need to pay 5% then it's actually profitable to take the loans. The problem comes when your stock drops 50% and you get margin called because the bank gets worried that you won't be able to pay back the 300m you owe. So you start with 1 billion. Take a 300m loan. The stock price drops 50% and the bank margin calls you because your leverage ratio is too high. So now you only have 500m in assets (1b -50%) and the bank takes 300m of that leaving you with $200m left as net worth. That's the danger he's facing
But… Most of the income at that level is through dividends and CEO bonuses come from financial results and are always tied to equity value of the company. Whatever relief from a tax break will be offset by weaker performance in results and equity value. I don’t think there is wide sentiment in the HNW category that there is a win if the economy goes to shit. There are opportunists and vultures but they are minority. The narrative that they want everyone to default on mortgages so Blackrock can buy them up and rent them back also makes no sense. They want to loan us money. We need to have equity for that to be a real and sustainable opportunity. Banks love mortgages and credit cards and every other way they can lend us money. The more equity we have the more they can lend us and with the least risk. There are more wealthy people would like to see their equity going up by millions or 100’s of millions, receive hefty dividends and, if they work, get paid huge bonuses in cash and stock than there are that want to scoop up deals in a bad economy.
We have a HNW but we don't trade options. We do like currency forex and sports.
High net worth individuals and retail being the largest buyers of the dip, as hedge funds and insiders are the leading sellers makes me feel like this ain’t the short term bottom. HNW individuals can be just as degenerate as retail
Eyyyyy brotha. Not an OG but we’re in the same exact boat. DCA doesn’t work with FIRE and I didn’t earn it with some HNW skillset I can just go back to work with.
I’m FIRE, so there’s no significant income coming in to DCA with and my time horizon has been fixed to four years ago, I have the luxury of going back to work but unlike a lot of FIRE people I made money as a retail investor so don’t really have a HNW career to go back to if my portfolio craters, and it would suck so badly to FIRE, make the right moves, and still end up bartending or working middle management. I’m 50-30 with 20% cash, rolled from 80/20 in November to 60/30/10 in January. Yes, I’m rebalancing in response to Donald Trump. I suspected chaos but IMO after seeing there is zero pushback from Democrats or other Republicans on a tariff war against our allies, I am forced to consider that he himself is a severe Black Swan Event.
Public market equities are just a single asset class within the moving parts of a well- structured HNW asset portfolio. That swing said— diversification of risk is an environmental thing. Perhaps long-biased Strategy isn’t always best for a sharpe ratio? Hmmmmm.
Professionals mostly don't even try to pick stocks. HNW money managers typically create portfolios based on certain benchmarks set by various banking analysts, so 70/30 stocks bonds, or 80/20 "balanced growth" and invest to match those benchmark returns. The goal is very rarely to 'beat' the market.
Check out catastrophe bonds. Make sure you do your research about what they are before investing in them. With that being said, the dividend yield is MUCH higher than what you would get from HYSA. Some cat bond ETFs are PDI and HNW
After tax muni yields are better than treasuries if you are in the highest tax bracket, FYI. I am in a similar boat, but I still plan on being long equities for most of my liquid portfolio. If you own enough real estate then I think you are sufficiently protected against inflation overall, but it's hard to see that when you live in your house. My recommendation is to keep a meaningful portion in higher risk assets and put the rest in muni / treasuries . If you want to protect against inflation then you can invest in shorter term bonds. I personally would never rely on HYSA for passive income. Curiously, have you looked into private equity at all? That is where the real returns are if you're HNW.
I’m a portfolio manager for a HNW team. So I’m biased to the investment side of things. Financial advisors / wealth advisors do well if they a. Invest well (enough) and b. Provide timely and accurate financial planning information. I’ve never had a client leave over performance, but the biggest “gains” most of my clients get is on tax avoidance. My team doesn’t make big bets tactically, we would typically out perform or underperform by 50bps in a given year. But we do so in a risk / volatility managed way, looking for best risk adjusted returns. Clients care mostly about the narrative. They are forward looking, when I do my annual reviews to the board of a pension or endowment in the end of January they care way less about 2024 performance and much more about what 2025 will look like. So, if you could get $100mm in a book of business, charge 50-75bps on the assets, you could build a nice little life for yourself. But clients want to see you trade, and they want to hear why you traded what you did. It’s all about the narrative. Make the world make sense to them, be their voice of reason, and you’ll do well. Getting core exposures for the benefits of diversification at a low cost is absolutely a core bedrock of what we do. It’s more like 13-15 funds though, not 2.
>It's a speculative asset that's had 15 years to demonstrate a use case beyond that and there's still nothing. Simply not true. As we speak, the financial industry is being revolutionized by crypto. As one example, take a look at what Hedera is doing. abrdn, the largest asset manager in the U.K., is tokenizing their funds here. https://hedera.com/blog/asset-tokenization-studio >When taking into account both institutional and High Net Worth (HNW) individuals, 77% stated that they have already invested in, plan to invest in, or want to learn more about tokenized assets, citing lower transaction costs, enhanced liquidity, improved performance, and increased transparency enabled by blockchain and distributed ledger technologies as key considerations; stakeholders at all levels are rapidly realizing the untapped potential of on-chain assets.
My broker (I know this sub hates brokers but this one outperforms the market, I'm up 40% YTD) told me to borrow against my house and put it in the stock market about 5 years ago, but I'm not comfortable with that amount of risk, so I didn't do it. I'd be significantly richer now if I had, but if things had gone south, I'd be significantly poorer and also making mortgage/HELOC payments when I don't have to. I'm a property manager professionally so I also would be wary of using it to buy a small rental property, because the risk isn't spread out enough - one bad tenant can eat up a year's worth of profits on a single unit and then, again, you're stuck making mortgage/HELOC payments when you don't have to. There are a lot of traps you can fall into as someone who doesn't know what they're doing (I don't mean that to be insulting, it's just starting from square 1). That said, lots of people have built a business by funding their first rental out of their home equity - just be ready to have a business; rental income isn't passive at all, especially if you don't want to pay 8-10% of your gross for a good manager. I'd recommend following r/landlord if you're serious about this. If I were comfortable risking the roof over my head (which ultimately I'm not even though I know this is the game HNW people play all the time), I'd probably go stock market, but that's mostly because I landlord all day long and don't wanna do it in my personal time as well. Either way don't do it if you can't afford the loan payments in the event of a bear market or loss of rental income.
Seriously. Marrying a similarly minded person who you enjoy being around? It sounds corny, but that's worth more than any number in some account. Money can only make you so happy. I'll see these articles and blogs about some random HNW individual (whether from family money, or business, or celebrities or athletes) and some of them seem like they are truly miserable and lonely underneath all the money.
2 things. The comment I was responding to was talking about alternative advisory billing besides an AUM fee, which is a tiny tiny minority of advisory billing, so yeah it is. If you go to Creative or Mercer, or ask for supplemental advisory services from Schwab and you have $750K retirement account, they are almost certainly going to charge you 1%. If you go to a local state registered advisor they often will charge 1.25%. If you look at an average mass affluent to low HNW retirement account with an active RIA managing it (what OP's parents have), 1% is very slightly below average. The range of service you get for that 1% varies greatly. Some firms will throw in tax filing, a financial plan, quarterly coaching, and estate planning services for that. Others charge 1.25% on a portfolio and just do asset management. I get you don't like the billing so an advisor isn't for you, but that is the state of the industry.
Totally missing my point. But that’s ok I’ll go back to managing my HNW portfolio
I work in the HNW space. A lot of our clients have this issue. We generally propose to divest the asset over 4-5 years to a manageable percentage of the portfolio (usually less than 10%). The asset manager should also be tax loss harvesting along the way. Funding assets to sell at a loss to off set gains. Good luck. I’m shorting NVDA so I hate you a little. 😆
The only real difference is a HNW person has to be careful how they move money because they have enough to crash a market. Otherwise, you'll find as much as a variety of investing strategies as the middle class. For example: George Soros is famous for his hedge funds, but Susie Orman (net worth $75M) is mainly bonds and treasuries. Obama (NW $70M) does index funds and bonds. Dave Ramsey (NW unknown, but likely comparable) Goes 1/2 realestate and 1/2 equities (mutual funds). Jeff Bezos has 3/4 of his net worth in Amazon, which he built.
What's the cutoff for HNW and UHNW?
HNW opens up a lot of opportunities to invest in venture capital projects with a small portion of your net worth. High risk, high reward stuff (20-300x).
Most DIY investors that are in regular white collar jobs that save money in a taxable brokerage do not efficiently do any tax loss harvesting… Instead of buying an index fund, HNW can directly index and then very efficiently do tax loss harvesting while maintaining a balanced index fund of their own making, with every share’s tax basis considered for tax loss harvesting along the way.
The average HNW cares much more about not losing money on their investments than they do about gaining outsized returns. Most of them are hoping the hedge funds will prevent them from serious losses in a market crash. Otherwise, they will use a lot more things like tax free bonds and they will probably diversify into more asset classes to get more diversification than VT would allow.
HNW folks can take a few more risks than others. They do not need the same percentage of cash as others do.
Short answer it doesn't. Reddit keeps churning out these myths like Family Offices. They think every uhnw person has a family office. Reality, you really need 500mill to justify it. All a FO is is a person you employ to buy investments, so even 50mil doesn't justify a $200-300k salary, or provide sufficient work to fill even a day a week. Also many HNW are good money managers, and have been investing for years, so they enjoy making their own portfolio which is not a time consuming task. The FO folk and advisors will chime in - they kove making everything complex to offset correlated risk, in their view, ie debentures etc, but most wealthy people under 50 don't see their exorbitant cost as justifiable when that money can go to charity or whatever. Most half financially educated people know that managers never outperform the market over 20 years, so they just use ETFs, throw in a few shopping centres, maybe a bit of PE or angel investing if they want to go to parties and get more involved. Some create their own sample ETF. Having an FO in the US is for social status for many sub 100mill. Oh, many also just hand their cash to a big investment firm and don't worry about it ever again - this is quite common actually, way more common to an FO.
High-net worth (HNW) investors often invest in a wider variety of assets beyond stocks and bonds (e.g., private equity, private credit, real estate, special situations, etc.). This additional diversification can provide both better absolute returns and risk-adjusted returns. The challenge for non-HNW investors is that these “alternative” asset classes have historically been inaccessible to the more typical investor — both because they often had significant wealth qualification requirements (e.g., required you to be a Qualified Purchaser with >$5M in investable assets) and imposed very high minimum investment amounts. Fortunately this is now changing with the rise of closed-end fund structures like interval and tender offer funds, which often have much lower minimums and many times have no qualification requirements.
This is accessible for HNW but not for everyone else: https://www.reddit.com/r/BuyBorrowDieExplained/comments/1f26rsf/buy_borrow_die_explained/
There's a difference between HNW and UHNW ("ultra"). I'm the former, and not particularly interested in becoming the latter, and this has allowed me to take **MORE** risks with small parts of my portfolio. (This may be what passes for "fun" at my age.) If you're worth $100K, you really don't want to gamble $20K on some investment you heard about on the internet. At 10 times that amount, you could pretty easily absorb a $20K loss from a $1Mn portfolio. This is how I lost 99% of my investment in Smile Direct 😁. "Oh, well..."
It sounds like you have a fortunate family from a financial standpoint that have all made good long lasting financial relationships and have had success with working with financial advisors to manage their money while they have spent time in the business or work earning enough to have extra to invest. That is a powerful combination they have accomplished. It appears you parents and grandparents have consolidated on a set of accomplished advisors. I would move your money to that set of advisors so it will be together with their future gifts. Frankly as much as you like your financial advisor and how helpful he has been to you, you are not a drop in the bucket in his gross income, so he is losing little financially by you moving away. I suspect you are a likeable guy and he is doing it as much as a friend as anything so will be sad to go, but will wish you Godspeed and success as you leave. I spent most of my career in a major broker dealer working in a regional capacity and helping our top teams manage their UHNW clients and their families. It is a fortunate thing to be exposed to the level of help you will get from a large accomplished team of HNW advisors. Enjoy the relationship as it builds.
> All private insurers flood insurance is underwrit by FEMA. This is not true and is a common misconception. Many companies offer inland flood coverage for lower risk areas, and some also offer further high risk flood policies, though those are mostly HNW carriers.
I agree, but that doesn't really answer the question. I suppose the issue is that HNW and UHNW people probably have access to fixed rate securities loans.
This has been reposted a lot, and every time I try to get clear answers on whether this is done a lot or whether it works, and if so why isn't it done a lot, etc etc. I'm 95% sure that it doesn't work nearly as easily or well as described here. For one thing, the step up in cost basis happens only as the assets are transferred to heirs. The debts owed to the banks must be settled first, which requires liquidating, which is a taxable event, so settling the debt will incurr all the taxes. In addition, the other reason it doesn't work is because it is basically margin trading, but long term. So they're taking on substantially more risk of being margin called if the markets drop, and they're pitting the borrow interest rates against taxes from market gains. If the markets stagnate, they'll lose the gamble. If the interest rates are high, this won't work. HNW families are generally much older and can be notoriously risk averse so margin trading risks are not very appealing most of the time. As near as i can tell, this idea would have worked for a brief time when markets were recovering well and also interest rates were rock bottom in 2019/early 2020. Overall, I don't think it is very widespread, I don't think it is very effective, and if it were, the government could narrow or close the loopholes on them at any time (step up & estate tax).
True. I was an MM in commodities for many years. Whenever the HNW/UHNW line rang, we would all scream 'free money on line one'
Most of the HNW clients I work with have retirement accounts. I think the only exception might be the real estate people who might not have earned income regardless.
Great outline thank you. I thought I hit a goldmine when I went into the weeds on Portfolio123 as a lot of what you posted above is stock in there. More coding than I would like but it was close. If I could find someone who is a wizard on Portfolio123 that would be a huge boost - but then again I would not know if that person was sharing it or not. And that is exactly the plan. Get the data that shows it works in up, down and sideways markets and then post to WSB to get some support for further testing. What gives me chills is that I don't think the indicators I've picked are 100% unique to the trade - its the part of setting the lag on on technical into a group of technicals that could apply universally to a lot of other trades. I have lot of people DMing me for private help, but like I said I want to release this all at once and never charge a dime to anyone. Another part that would be cool would be to open up an RIA that doesn't allow anyone who is HNW or UHNW.
Google the guardrails approach. This is a more recent study by financial wonks and is the method I plan to employ in my future retirement. In short, if there is a 10% movement in your portfolio, you drop your spending. I know some people don't want to reduce retirement spending but I personally think flexibility leads to resilience. Also I recomend reading a lot of Kitces stuff, he is a thought leader for HNW clients and is now advising the advisors more and more. [https://www.kitces.com/blog/implementing-retirement-income-guardrails-to-facilitate-the-right-spending-raises-and-spending-cuts/](https://www.kitces.com/blog/implementing-retirement-income-guardrails-to-facilitate-the-right-spending-raises-and-spending-cuts/)
IMHO you probably shouldn't be seeking advice about this on Reddit because....most of the people here are YouTube educated and only follow viral trends for investing advice. If you're trying to build a real business, you'll need to venture out in to the real world and go to conferences, etc. FWIW my journey has been similar to yours, and I'm current an RIA doing separately managed accounts, which is what you mentioned you are considering. I actually find a lot of satisfaction in doing so because the returns are more personalized to the investor and you can show them a personal rate of return, etc. Sure, you're not going to get the satisfaction of trading a $100M fund, but you're helping individual people. I also find more satisfaction in helping the "average person" get a better return on their investments, rather than just helping the "rich get richer" -- which is what hedge funds are for because only HNW individuals can invest in those. Not saying I wouldn't consider building my own fund someday, but it's a different class of people I'd be dealing with, so for now it doesn't sound enticing. My returns, while similar to yours, average out to about 30-40% annual when averaged over several years over many accounts. Yes, my broker was reporting returns >150% for 2023 for many of our accounts, but I discount their reporting because much of that "return" was just recovery from 2022. This is why I like to take a bigger time perspective. I think you'll find that nearly all of your clients who invest will come from your personal network. Advertising simply doesn't work very well in this industry -- unless you're going after tiny/impressionable investors like the RobinHood model, or Wealthfront, etc. You need to expand your personal network and build meaningful relationships with people who could invest with you after you earn their trust. THAT is the barrier, in my opinion, is earning the trust of a potential client, especially if you're expecting them to give you 100's of thousands of their money to manage. So get out to conferences, join golf clubs, intermingle with the people you're seeking to help, and build relationships with them. That's my two cents. However, it's "only two cents" -- I would neither consider myself an expert in this regard nor have solved this for myself. Just sharing my limited experience.
What are you saying? Are you asking why HNW people buy houses and rent them out to tenants, or why do HNW people rent where they live rather than buying houses? If it’s the first, taxes. If it’s the second, flexibility.
Keeping deposits is a liability. Dodd Frank regs require held capital ratios corresponding to deposits etc. so dropping the deposit amounts and focusing on HNW people who use services that generate fees is a better biz model.
You should only buy individual stocks if you have the time and ability to watch them like a hawk. The top S&P companies you listed are all from similar industries and highly correlated, so too concentrated if that’s your only investment. Some HNW people do direct indexing, where they (their asset managers) buy individual stocks in the index instead of ETF or mutual fund. Direct indexing gives you better control over taxes, but not higher returns.
The they can’t falsify the prospectus given to HNW investors lol
Assuming you’re younger than 40, if you have a stock portfolio worth 1M at this point in your life, good chance you’ll be in the top 1% by the time you retire. So yeah ur down the ladder from the ultra HNW individuals, but way up from 99 of people ur age likely.
Holy shit. And to imagine people pay you for this advice. That statement right there just proves you have zero experience doing any estate planning and tax mitigation for HNW individuals. Go back to peddling whatever shitty mutual funds you have at Edward Jones.
Tell that to the HNW & UHNW clients I work with 🤣. You’re the typical DIY’er who thinks because they’re mediocre in their field they can be proficient in others. Sadly not everyone is in tune with reality
Your statement is contradictory, you want to invest in a fund that is hedged aka focuses on reducing downside exposure involving trading it for an ideally lesser amount of upside exposure passively or actively, but want the highest annual percentage return? The whole point of hedge fund is to focus on risk, not just the highest return. I would recommend ETFs, SMAs, and/or mutual funds and for the private markets, you can look into the many private REITs that an advisor may offer if ur a HNW by their standard.
Financial advisors are not the worst if they are Fiduciary. Those are the people who are required to work with you in terms of your best interests, not just sell you products. Get one with a flat fee, not a % of assets, if you look for one. As a more serious response as someone who works in Private Equity, and was a bit flippant at first because I get a lot of very bad takes (but you seem genuine so I'll be genuine), $5m is what I would put as the lower bar to invest in a fund, and PE is a high-risk diversifier, not necessarily a way to make a ton of money quickly. If you fall into HNW or the bottom of VHNW, so between $5m and $10m in assets, I would avoid it personally. The risks and lack of liquidity make it, at least in my opinion, not well-suited for investment. Many funds are going to have a $5m minimum investment, you wont be able to withdraw your money for years, and they are risky. Now what you could do is take $100k and register for one of the sites like EquityZen or hiive that sell private equity chunks and play around there. That could get you some of the fix you're looking for. I really like your idea of taking some classes on finance, especially if you now have enough money that you can comfortably live on it, it seems like you do have the correct attitude towards wealth. If I were you, I would take classes, find a fiduciary financial advisor, and just do some research. If you do look at PE funds, find some in your area (PE is a relationship more than traditional advising!) and sit down with a couple and chat. A lot wont be raising right now, but could be raising in the future. You do want someone you'll have a handshake relationship with and they actually can be very good resources. I also can answer most questions you might have about PE, but there really arent many definitive books written about it, it is more of an in-person thing. I got my start at a M7 business school and all our PE classes didn't have textbooks, but the teachers had been in-industry for decades.
Common peasants like us certainly wouldn't get 4x leverage, it would most likely be some kind of Lombard-credit offered by banks to HNW individuals
This was insightful, thank you! What are some of the more successful tax avoidance strategies that HNW/UHNW people use?
You don’t do Lombard loans in HNW? They’re very popular in private banking.
Man, it's so wild seeing people on reddit sit there and make up scenarios that don't exist at all in the real world. I work with UNHW specifically in the asset management, pension construction, and planning space. Nobody's doing that. And yet constantly I get on Reddit and people are just so confident that they are lol. A few problems: 1) asset backed loans aren't term constrained or fixed. They're variable. 2) Over the course of a decade any investment account will have sufficient turnover and loss creation to fund that liquidity need without taxes being a major concern 3) your borrowing needs to be a relatively small enough portion of your net liquid investment value to not create margin call issues. Asset backed loans are increasingly scrutinized by regulators and are being subject to basically the same constraints as margin 4) You can't just skip out on paying off debt lol. Portfolio borrowing is great for a short term need, not funding retirement expenses over time. 5) It doesn't actually save much money. Any sufficiently large enough portfolio to pull this sort of dumb idea off (ignoring the prior constraints) also has enough dividends and turnover to fulfill most ongoing cashflow requirements. This is just one of those things that someone with no experience in HNW came up with, told others that had no experience that was how "wealthy people" did things, and it just got propagated online among individuals who didn't know any better.
The answer is an order of magnitude less than everyone on the internet seems to think they do. Sincerely, a guy who’s worked in HNW for over a decade.