When I first got into the industry, to get a professionally managed account you had to have over a million dollars. Today, with retail fund accounts, you can get in with as little as $50 per month. Most people I encounter who have yet to plan for their future, or have done so minimally, think they have to have some large sum of money. Ladies and gentlemen, I’m here to tell you that this is not the case. You can accomplish pretty much anything you want to do. The industry has become very flexible, and it can accommodate almost any net worth these days. Who cares if you have to start small? At least we live in a country that makes it relatively easy to start at all!
Now for those of you who have been building your wealth for years, I’ve found you have a different challenge. The majority of people in this great country of ours have been doing business with financial professionals who don’t have access to a full array of investment options. This is where you can really experience misperceptions about what’s available and what’s best for you. I can’t tell you how many extremely wealthy men and women I meet have spent years with a stockbroker, only to wake up and suddenly yearn for something more. They’re seeking a professional relationship that gives them more than just specific stocks and bonds recommendations. Their risk tolerance has changed and they’ve become interested in more than simply stocks and bonds, but they’re not being informed about all that’s available to them. Research done by Ibbotson Associates, a leading authority on asset allocation with expertise in capital market expectations and portfolio implementation, showed that 91.5% of performance of an investment portfolio is based on how well you diversify your assets. One great way to diversify is to have investment holdings outside the stock and bond markets. I read an article recently that said that if you had $100 million, you could invest in a specific portfolio built with privately held companies. Talk about options! You may not have this one, nor do many people have a spare $100 million sitting around, but most can still be more diversified.
Here’s another misperception: Real estate is not a viable investment for everyday people. Perhaps people you know aren’t willing to take the risk of investing in real estate. What about rental property or commercial leasing? It ties up funds, but does that lack of liquidity fit with your risk tolerance? There are many options to get into real estate. They can be great investment alternatives to consider. For instance, even non-traded real estate investment trusts (REITs) or limited partnerships can perform exceptionally well. You do need to make sure you’re an informed investor, and make sure your investments match your personal risk tolerance. As you can see, your options may not be as limited as you perceive.