The rich invest differently

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03 Feb 2014 18:15 #18966 by relaxing
Here’s an article on how the rich invest, though I dunno what’s their average nett worth? A rich person is defined as someone who has lots of money or assets. The old yardstick of USD1 million no longer applies. According to a recent survey among rich people in US, you need to have least USD5 million of assets to be considered rich, meaning you can do whatever and whenever you like without worries..

Most rich people today are self made, so I am not surprised that they invest 21% in private equity vs 23% in public equity. As they are already enjoying a great lifestyle, it’s stupid to risk all to be richer, hence their investments are spread out widely, and they deem an overall 10%/yr return as great ie USD500K/yr is a decent amount to live on.

Compare this with a modest retail investor with USD50K. A 10%/yr return is only USD5K, barely enough for a decent family holiday overseas. So instead of being happy, guess what he does ? He diligently look for high risk multi bagger shares ( usually penny stocks ) in the hope of being rich overnight, but instead end up losing money. IMHO, once people realise that there is no short cut, then their situation will improve.

blogs.marketwatch.com/thetell/2014/01/22...ut-we-can-copy-them/

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05 Feb 2014 12:45 #18981 by Val
Replied by Val on topic The rich invest differently
re: "So instead of being happy, guess what he does ? He diligently look for high risk multi bagger shares ( usually penny stocks ) in the hope of being rich overnight, but instead end up losing money."

Relaxing, your views are generally OK with me. But the quote above has startling exceptions among investors I know. A few people made multi-baggers out of HYFLUX when it was a small-cap.

They are savvy investors looking for such gems among small-caps, and they have gotten rich on 50% gains. They continue in their quest and will probably get higher. It's a long game and they keep scoring goals (because of their skills, luck etc).

Today's future big gainers could be XMH (29 c), TRITECH (49 c), and SINO GRANDNESS (65 c). I am just looking thru the forum postings and have done some research. Good luck!

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07 Feb 2014 12:34 #19017 by relaxing
Viva – After a market crash ( eg late 2008 ) there is a good chance to pick multi baggers. But its difficult to pick them now that STI is about fully valued, unless you know the biz of a hidden gem well or it’s mgt from biz dealings etc. I guess its ok for savvy investors to try anything , but expect choppy Asian markets ahead as US tapers, or when local property market corrects.

A 10%/yr compound return is not bad as it doubles one’s investment every 7.2 yrs. W Buffett, the greatest investor of all times “only” managed an ave. compounded 20%/yr return over 48 yrs, doubling his money every 3.6 yrs. Almost all his wealth are in Berkshire, which doesn’t pay dividends LOL, but it’s shareholders don’t complain as they want all the profits to compound too. Anyway, good luck.

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