High net worth investors v average retail investors

MK62

Type_45 said:

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.

Investing in something which "can never go to zero" is not the same as risk free.....unless you are claiming that these assets cannot fall in value either.......
Also, investing in bonds does not necessarily mean getting your money back........and it's certainly not risk free.....especially when you also factor inflation in.

Section62

Type_45 said:

....

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

I knew that was coming from the very first post in the thread.

The 'poor' are exposed to all the risk, the 'rich' sit fat and happy, and protected.  Same tune, just a different video.

jimjames

Type_45 said:

High net worth investing (the top 10 percent of investors):
- Invest in assets which go up in value and have a residual value (residual value means cannot go to zero)

Most/many investors use funds such as index trackers or multi asset funds. Are you suggesting that these can go to zero but someone HNW won't use them? If an index has reached zero then we're all doomed. Sounds to me like the person doing the video has no clue what they're talking about. (Clearly some people do invest in things like LCF or Blackmore bonds where the value goes to zero but I'd suggest that is a minimal number of people compared to the overall number of investors.)

Type_45

Section62 said:

Type_45 said:

....

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

I knew that was coming from the very first post in the thread.

The 'poor' are exposed to all the risk, the 'rich' sit fat and happy, and protected.  Same tune, just a different video.

The poor aren't exposed to risk because they don't have any money to invest.  I am talking about retail investors such as you and I.  I don't consider myself poor.

And neither did I refer to the "rich".  I referred to the "wealthy".  The top 10%.

Type_45

MK62 said:

Type_45 said:

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.

Investing in something which "can never go to zero" is not the same as risk free.....unless you are claiming that these assets cannot fall in value either.......
Also, investing in bonds does not necessarily mean getting your money back........and it's certainly not risk free.....especially when you also factor inflation in.

It kind of is.  Real estate, precious metals etc will never go to zero.  And if their value drops you just hold on to it and it will go back up again.  It's as risk-free as it gets.  

Type_45

jimjames said:

Type_45 said:

High net worth investing (the top 10 percent of investors):
- Invest in assets which go up in value and have a residual value (residual value means cannot go to zero)

Most/many investors use funds such as index trackers or multi asset funds. Are you suggesting that these can go to zero but someone HNW won't use them? If an index has reached zero then we're all doomed. Sounds to me like the person doing the video has no clue what they're talking about. (Clearly some people do invest in things like LCF or Blackmore bonds where the value goes to zero but I'd suggest that is a minimal number of people compared to the overall number of investors.)

It says in the video that the wealthy invest 20% in equities.

No, we aren't "all" doomed.  The wealthy will be absolutely fine.  They own more than just stocks.  Which is the point of this thread.

Linton

Type_45 said:

jimjames said:

Type_45 said:

High net worth investing (the top 10 percent of investors):
- Invest in assets which go up in value and have a residual value (residual value means cannot go to zero)

Most/many investors use funds such as index trackers or multi asset funds. Are you suggesting that these can go to zero but someone HNW won't use them? If an index has reached zero then we're all doomed. Sounds to me like the person doing the video has no clue what they're talking about. (Clearly some people do invest in things like LCF or Blackmore bonds where the value goes to zero but I'd suggest that is a minimal number of people compared to the overall number of investors.)

It says in the video that the wealthy invest 20% in equities.

No, we aren't "all" doomed.  The wealthy will be absolutely fine.  They own more than just stocks.  Which is the point of this thread.

If equity index trackers go to zero then all equity must have dropped to zero.  What else do the wealthy invest in other han equity as a high % of their assets?  

MK62

Type_45 said:

MK62 said:

Type_45 said:

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.

Investing in something which "can never go to zero" is not the same as risk free.....unless you are claiming that these assets cannot fall in value either.......
Also, investing in bonds does not necessarily mean getting your money back........and it's certainly not risk free.....especially when you also factor inflation in.

It kind of is.  Real estate, precious metals etc will never go to zero.  And if their value drops you just hold on to it and it will go back up again.  It's as risk-free as it gets.  

By that logic, then a well diversified equities portfolio is also as "risk free" as it gets......

Type_45

Linton said:

Type_45 said:

jimjames said:

Type_45 said:

High net worth investing (the top 10 percent of investors):
- Invest in assets which go up in value and have a residual value (residual value means cannot go to zero)

Most/many investors use funds such as index trackers or multi asset funds. Are you suggesting that these can go to zero but someone HNW won't use them? If an index has reached zero then we're all doomed. Sounds to me like the person doing the video has no clue what they're talking about. (Clearly some people do invest in things like LCF or Blackmore bonds where the value goes to zero but I'd suggest that is a minimal number of people compared to the overall number of investors.)

It says in the video that the wealthy invest 20% in equities.

No, we aren't "all" doomed.  The wealthy will be absolutely fine.  They own more than just stocks.  Which is the point of this thread.

If equity index trackers go to zero then all equity must have dropped to zero.  What else do the wealthy invest in other han equity as a high % of their assets?  

It's really hard to believe isn't it that there's anything other than equities to invest in.  If I suspend my disbelief for a minute though I reckon they could have most of their wealth in land/property, businesses, bonds, gold, private jets, private islands, paintings/artwork....  and the list goes on.  And I can also imagine that even if you wanted to track down a wealthy person's assets, you wouldn't find most of it.  That's how they remain wealthy.

What they don't have is £10bn in Vanguard LifeStrategy 80 which is can plummet in value at any moment, be seized by the government, be swallowed up by a new unforeseen tax, be claimed by a soon-to-be divorced spouse, or disappear when your platform or provider goes bust.

Linton

Type_45 said:

MK62 said:

Type_45 said:

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.

Investing in something which "can never go to zero" is not the same as risk free.....unless you are claiming that these assets cannot fall in value either.......
Also, investing in bonds does not necessarily mean getting your money back........and it's certainly not risk free.....especially when you also factor inflation in.

It kind of is.  Real estate, precious metals etc will never go to zero.  And if their value drops you just hold on to it and it will go back up again.  It's as risk-free as it gets.  

Why not?  If no-one wants them they have no value.

Do you know what shares are?  Companies are owned by their shareholders.  The only way a company's shares could be of zero value would be if the company had no assets and was not able to make a profit which implies the company would either be nationalised or cease to exist.

Are you really forecasting a world where no private sector businesses exist?  In such a world where would wealth come from? How will the rich become richer if all they can do is to trade gold and land between themselves?