High net worth investors v average retail investors

Grumpy_chap

Type_45 said:

- They own a lot of bonds due to the guaranteed payments coming back from them plus their money back so there's no risk

Didn't the BoE need to take action to shore up the value of pension funds with high level of bonds?  So, not a "no risk" investment.

masonic

Grumpy_chap said:

Type_45 said:

- They own a lot of bonds due to the guaranteed payments coming back from them plus their money back so there's no risk

Didn't the BoE need to take action to shore up the value of pension funds with high level of bonds?  So, not a "no risk" investment.

The problem with the pension funds is that they didn't hold the high level of bonds, but instead replaced some of them with growth assets along with a derivative to hedge the risk. It was the failure of the derivative (due to extreme stress in the market) that caused the problem.

adindas

They only have 20% of their money in equities" So 80% is probably in cash to anticipate the market crash of 80% be the end of the year then, like one of the prophets on MSE in here has been saying ?

https://finance.yahoo.com/news/where-millionaires-keep-money-070638027.html This is Where Millionaires Keep Their Money, Yahoo Finance August 15, 2022

https://abcnews.go.com/US/wireStory/buffett-invests-big-chunk-berkshire-hathaways-cash-84415416

Considering Berkshire Hathaway Inc. (BRK-A + BRK-B) market cap is about US$1T+. This is just about 10% in cash, let alone 80%. People could easily search other billionaires cash positions. 

It is only insensible people will ever believe they are holding 80% in cash.

Warren Buffett's 90/10 Asset Allocation

https://www.investopedia.com/articles/personal-finance/121815/buffetts-9010-asset-allocation-sound.asp

90% of her money into a very low-fee stock index fund and 10% into short-term government bonds. This is what is called the "90/10 investing strategy."

Type_45

Grumpy_chap said:

Type_45 said:

- They own a lot of bonds due to the guaranteed payments coming back from them plus their money back so there's no risk

Didn't the BoE need to take action to shore up the value of pension funds with high level of bonds?  So, not a "no risk" investment.

That's precisely why it is a no-risk investment.

Type_45

eskbanker said:

Even if there was any validity in those wild sweeping generalisations about what different types of investors are assumed to buy, the fundamental question would remain: so what?

The "so what" is explained toward the end of the video.  "If you want to be wealthy, invest as the wealthy invest".

coyrls

Type_45 said:

eskbanker said:

Even if there was any validity in those wild sweeping generalisations about what different types of investors are assumed to buy, the fundamental question would remain: so what?

The "so what" is explained toward the end of the video.  "If you want to be wealthy, invest as the wealthy invest".

Why?  Did they invest that way before they were wealthy or after?  Before they were wealthy they would have been in the 80% who invest differently or were they perhaps born wealthy?  In which case the advice should be to be born wealthy.

Type_45

coyrls said:

Type_45 said:

eskbanker said:

Even if there was any validity in those wild sweeping generalisations about what different types of investors are assumed to buy, the fundamental question would remain: so what?

The "so what" is explained toward the end of the video.  "If you want to be wealthy, invest as the wealthy invest".

Why?  Did they invest that way before they were wealthy or after?  Before they were wealthy they would have been in the 80% who invest differently or were they perhaps born wealthy?  In which case the advice should be to be born wealthy.

Take from it whatever you want.  What I took from it is:  What the wealthy invest in can never go to zero.  What the average retail investor invests in CAN go to zero.


This, I feel, is why the transfer of wealth from bottom to top keeps happening.

Prism

Type_45 said:

eskbanker said:

Even if there was any validity in those wild sweeping generalisations about what different types of investors are assumed to buy, the fundamental question would remain: so what?

The "so what" is explained toward the end of the video.  "If you want to be wealthy, invest as the wealthy invest".

Probably if you want to stay wealthy rather than become wealthy. Most of them became wealthy through work, not investments

eskbanker

Type_45 said:

eskbanker said:

Even if there was any validity in those wild sweeping generalisations about what different types of investors are assumed to buy, the fundamental question would remain: so what?

The "so what" is explained toward the end of the video.  "If you want to be wealthy, invest as the wealthy invest".

Not that I have any intention of watching it but did they say they became wealthy by watching YouTube videos and believing them?

ChesterDog

If you want to to make high returns, you need to take on risk.

If you have enough capital but still seek growth, the level of risk you need to take is reduced.

"The wealthy" (and my wife and I have reached that position judged by some measures stated here) are unlikely to have become so by behaving as if they already were. The opposite is true.

Edit: I should add that neither of us would feel that we were in that category ourselves.