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High-net-worth investing strategies are tailored for individuals with liquid assets typically exceeding $1 million. Financial advisors tend to handle these high-net-worth individuals (HNWIs) somewhat differently than other clients. Such investors may pursue opportunities like private equity, hedge funds, direct real estate and tax-advantaged municipal bonds, among others. They may receive more personalized services and may have a longer investment horizon as well. The goal is often to balance growth, preservation and tax efficiency while addressing complex financial needs.
A financial advisor can help high-net-worth individuals make a strategic plan for their wealth. Connect with your advisor matches today.
1. Tailored Wealth Management
High-net-worth individuals (HNWIs), typically defined as those with investable assets exceeding $1 million, often require more personalized investing strategies than the average investor. Their portfolios may be structured for long-term capital preservation, tax efficiency, intergenerational wealth transfer or philanthropy. Working with private wealth managers or multi-family offices gives these investors access to niche investment opportunities and more complex financial planning.
2. Private Equity and Venture Capital
Private equity and venture capital enable investments in companies that are not publicly traded. These investments are generally illiquid and long-term but can offer opportunities for outsized returns. They are likely to be best suited for HNWIs with the capacity to commit capital for extended periods. Participation typically occurs through private equity funds, direct investments or co-investment arrangements alongside institutional partners.
3. Direct Real Estate Investment
Many HNWIs include real estate as a core component of their portfolios, using it both for income generation and as a hedge against inflation. Commercial properties, multi-family housing and industrial real estate are common options. Direct ownership offers control over asset management and the potential for favorable tax treatment through depreciation and 1031 exchanges.
4. Hedge Funds and Alternative Strategies
Hedge funds use complex strategies, including long-short equity, global macro and event-driven tactics. These funds aim to generate returns in various market conditions and are available primarily to accredited investors, a category of investor that includes many HNWIs. Allocating a portion of capital to hedge funds can provide diversification beyond traditional stocks and bonds, though fees and transparency vary widely.
5. Tax-Exempt Interest Dividends and Municipal Bonds
Tax-exempt interest dividends are paid by municipal bond funds and are typically exempt from federal income tax. In some cases, they are also exempt from state taxes if the investor resides in the issuing state. For HNWIs in high tax brackets, municipal bonds or funds investing in them may provide a more favorable after-tax yield compared to taxable bonds. Some private municipal bond funds may also offer exposure to higher-yielding or bespoke municipal debt opportunities.
6. International Diversification
Global investments allow for exposure to emerging markets, foreign currencies and overseas growth sectors. In pursuit of global diversification, HNWIs may hold international equities, sovereign bonds or foreign real estate. Currency fluctuations, political risk and tax treaties are considerations when investing abroad. These are often addressed through globally diversified funds or direct holdings managed by international wealth advisors.
7. Separately Managed Accounts (SMAs)
Separately managed accounts are customized portfolios of individual securities tailored to the investor’s financial goals, tax situation and values. Unlike mutual funds, SMAs provide direct ownership of securities, allowing for tax-loss harvesting and specific strategies like socially responsible investing. This structure also supports integration with legacy planning and charitable giving strategies.
8. Donor-Advised Funds
Wealthy individuals frequently incorporate charitable goals into their investment plans. Donor-advised funds (DAFs) offer a flexible way to contribute assets, receive an immediate tax deduction and direct charitable grants over time. Other structures, such as private foundations or charitable remainder trusts, allow for more control and potentially greater tax advantages, especially when donating appreciated securities or real estate.
9. Family Limited Partnerships
Family limited partnerships (FLPs) and similar entities are used to consolidate and manage family wealth while facilitating generational transfer. These vehicles allow for valuation discounts and more structured asset management. When combined with gifting strategies, trusts, and estate planning, FLPs can contribute to long-term financial continuity and tax efficiency.
10. Concentrated Stock Strategies
For individuals who acquire significant wealth through stock in a single company—such as founders, executives or early investors—the resulting concentrated positions often require specific strategies. Techniques such as equity collars, exchange funds, or charitable stock contributions help manage risk and reduce exposure. These approaches seek to preserve value while working around tax and liquidity limitations.
11. Gold and Hard Assets
Hard assets like gold, precious metals, and fine art are often included as part of a diversified portfolio. These assets may act as inflation hedges or stores of value during periods of market volatility. Custody, storage, and valuation present special challenges. However, HNWIs often have access to platforms or private banks that facilitate such investments.
12. Private Credit and Direct Lending
HNWIs can participate in the private credit market by lending directly to middle-market businesses or participating in credit funds. These investments typically offer higher yields than traditional bonds, with varying degrees of risk and liquidity. Private debt strategies include mezzanine financing, real estate debt and asset-backed lending.
13. Art and Collectibles
Beyond traditional financial markets, some wealthy individuals allocate a portion of their portfolio to collectibles such as fine art, vintage cars or wine. These assets may appreciate over time while, unlike other investments, also providing cultural or personal satisfaction. Market knowledge and authenticity verification are critical in these markets, often supported by expert advisors or art funds.
Example of a High-Net-Worth Investment Portfolio
HNWI portfolios are usually structured to meet multiple goals at once, which can include long-term growth, capital preservation, tax efficiency and estate planning. While every investor’s situation is different, an HNWI’s portfolio might combine traditional and alternative investments with personalized financial planning strategies.
A well-diversified high-net-worth portfolio could include a mix of public equities and bonds alongside private equity, hedge funds and real estate. The table below breaks down a general example.
| Asset Class / Strategy | Allocation | Purpose |
|---|---|---|
| Global public equities | 30% | Long-term growth through diversified stock holdings |
| Tax-exempt municipal bonds | 20% | Stable income with federal (and possibly state) tax savings |
| Private equity and venture capital | 15% | Higher return potential from private business investments |
| Hedge funds and alternative strategies | 15% | Market diversification and potential downside protection |
| Direct real estate investments | 10% | Income generation and inflation hedge |
| Gold and other hard assets (e.g. collectibles, art) | 5% | Store of value and non-market-correlated assets |
| Private credit and direct lending | 5% | Enhanced yield from private debt opportunities |
As you can see in the table above, an HNWI might allocate 30% to global public equities for growth, 20% to municipal bonds for tax-advantaged income, 15% to private equity and venture capital for access to private markets and another 15% to hedge funds or alternative strategies for diversification. The portfolio also includes 10% in direct real estate for income and inflation protection, 5% in hard assets like gold or collectibles as a store of value and 5% in private credit or direct lending for higher yields.
Additional components may include international exposure through foreign equities or real estate and strategies to manage concentrated stock positions—especially for individuals who have acquired wealth through company ownership. Overall, an HNI portfolio goes beyond standard asset classes and often involves advanced planning tools, tax-aware strategies and access to private market opportunities that are not available to the general public.
Bottom Line
High-net-worth individuals often combine traditional investments with specialized approaches that reflect their broader financial goals, personal interests and capacity for long-term commitment. These strategies tend to be highly customized and may involve private equity, family limited partnerships or concentrated equity positions. With access to a wider range of tools and opportunities, the focus often shifts toward optimizing outcomes across multiple dimensions, from risk and tax treatment to legacy and impact.
Investment Planning Tips
- A financial advisor can help you identify investment opportunities and manage risk for your portfolio. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you want to diversify your portfolio, here’s a roundup of 13 investments to consider.
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