Nov. 11, 2025
How the top 0.01% invest their money (and how you can copy them)
🔴 Free LIVE Workshop - Dec 17th at 6pm ET / 9pm PT
Learn how to architect your own "Micro Family Office". Apply at https://dub.sh/wealthops
Did you know that investors with over $20 million allocate only 23% of their portfolios to public stocks and 7% to bonds, while most financial advisors recommend 60% in stocks and 40% in bonds?
In this episode, I share how the ultra-wealthy allocate the other 70% of their portfolios and how you can model their approach. We'll dive into the key assets they use, such as real estate and private equity, and how these asset classes generate higher returns, offer tax advantages, and protect against market volatility.
Transcript
WEBVTT
00:00.031 --> 00:08.579
[SPEAKER_00]: Did you know then investors with $20 million or more put only 23% of their portfolio in public stocks and 7% in bonds?
00:08.720 --> 00:14.125
[SPEAKER_00]: Well, most financial advisors tell you to put 60% in stocks in 40% in bonds.
00:14.365 --> 00:22.013
[SPEAKER_00]: In this video, I'm going to share how the ultra wealthy allocate the other 70% of their portfolio and how you can model them.
00:22.033 --> 00:25.296
[SPEAKER_00]: I'm Christopher Nelson and I started following this approach years ago.
00:25.276 --> 00:37.681
[SPEAKER_00]: It helped me transition from a traditional portfolio that was over concentrated in a single stock to one that generates now over $200,000 per year in cash flow, while still growing the portfolio value.
00:37.861 --> 00:41.889
[SPEAKER_00]: So let's start with the number one asset, the ultra wealthy allocate too.
00:42.090 --> 00:43.352
[SPEAKER_00]: But first,
00:43.332 --> 00:45.033
[SPEAKER_00]: Where did these numbers come from?
00:45.374 --> 00:50.138
[SPEAKER_00]: Well, I pulled them from the Q4 2024 report from Tiger 21.
00:50.158 --> 00:52.440
[SPEAKER_00]: I'm going to put a link to that in the description.
00:52.620 --> 00:58.926
[SPEAKER_00]: Tiger 21 is a private network that requires a minimum of $20 million in investable assets to join.
00:59.246 --> 01:02.248
[SPEAKER_00]: Members share their actual portfolio allocations quarterly.
01:02.629 --> 01:04.090
[SPEAKER_00]: So this isn't theory.
01:04.711 --> 01:05.531
[SPEAKER_00]: This is real money.
01:05.792 --> 01:12.177
[SPEAKER_00]: Now that we know that the data sources legit, let's unpack their number one portfolio holding real estate.
01:12.317 --> 01:13.238
[SPEAKER_00]: That's right.
01:13.218 --> 01:20.026
[SPEAKER_00]: not stocks, not bonds real estate, and it makes up 28% of their portfolio.
01:20.226 --> 01:23.670
[SPEAKER_00]: And this makes total sense when you understand what real estate provides.
01:23.990 --> 01:25.652
[SPEAKER_00]: First, it gives you income.
01:25.913 --> 01:40.930
[SPEAKER_00]: Real estate can generate monthly cash flow, whether it's single family rentals, multifamily properties, commercial real estate, industrial buildings, you're collecting rent checks that hit your account every single month.
01:40.910 --> 01:42.892
[SPEAKER_00]: This is income-producing wealth.
01:43.393 --> 01:47.398
[SPEAKER_00]: It's not just a number on a screen that goes up and down based on market sentiment.
01:47.638 --> 01:50.422
[SPEAKER_00]: It's actual cash that you can use to cover your expenses.
01:50.782 --> 01:54.227
[SPEAKER_00]: Second is appreciation potential in tax advantages.
01:54.687 --> 02:01.095
[SPEAKER_00]: Beyond the long-term growth from property appreciation, the most significant advantage is found in the tax benefits.
02:01.143 --> 02:07.770
[SPEAKER_00]: Even though the building is increasing in value, the IRS allows you to record a depreciation expense.
02:07.790 --> 02:13.476
[SPEAKER_00]: This deduction, which is purely a paper loss, can be used to offset your rental income.
02:13.637 --> 02:17.681
[SPEAKER_00]: This turns profitable cash flow into a low or zero tax event.
02:17.861 --> 02:23.387
[SPEAKER_00]: This depreciation gold mine is a massive unique accelerator for your after tax return.
02:23.627 --> 02:25.790
[SPEAKER_00]: Third, it's an inflation hedge.
02:26.130 --> 02:27.792
[SPEAKER_00]: As inflation rises,
02:27.772 --> 02:37.452
[SPEAKER_00]: Generally, so-do rents and property values, real estate naturally protects your wealth against currency devaluation, and fourth, diversification from market volatility.
02:37.692 --> 02:40.739
[SPEAKER_00]: Real estate does not move in lockstep with the stock market.
02:40.959 --> 02:47.232
[SPEAKER_00]: When stocks take a nose dive, I rental properties keep generating the same amount of cash flow every single month.
02:47.330 --> 02:52.700
[SPEAKER_00]: Now, if you're looking at really state to your portfolio, here are a few avenues that you can explore.
02:52.920 --> 02:59.552
[SPEAKER_00]: First, there's direct ownership, which just means buying properties yourself, like a single family home for renting.
02:59.893 --> 03:08.809
[SPEAKER_00]: Second, there's real estate syndications where you pool money with other investors to purchase a single asset, larger deals.
03:08.829 --> 03:11.093
[SPEAKER_00]: The third is real estate funds.
03:11.073 --> 03:14.258
[SPEAKER_00]: professionally managed portfolios that handle everything for you.
03:14.518 --> 03:23.853
[SPEAKER_00]: In fourth, there's REITs real estate investment trusts, though keep in mind these trade on the stock market so they move in lockstep with public equities.
03:24.153 --> 03:25.395
[SPEAKER_00]: Here's the key point.
03:25.415 --> 03:33.908
[SPEAKER_00]: All tool wealthy investors allocate 28% to real estate because it's the best asset class for generating tax advantage income,
03:33.888 --> 03:35.371
[SPEAKER_00]: while building equity.
03:35.611 --> 03:39.698
[SPEAKER_00]: Now, also coming in with 28% of the portfolio is private equity.
03:39.858 --> 03:47.111
[SPEAKER_00]: When most people here private equity, they think it's only for institutional investors or ultra wealthy families, but that's not true anymore.
03:47.131 --> 03:51.658
[SPEAKER_00]: Private equity simply means ownership in private operating businesses.
03:52.059 --> 03:55.525
[SPEAKER_00]: This could be investing in a friend's manufacturing business.
03:55.505 --> 04:02.934
[SPEAKER_00]: joining a private equity fund buying into syndicated business opportunities or even owning part of a local car wash chain.
04:03.014 --> 04:08.381
[SPEAKER_00]: The reason ultra wealthy investors love private equity is control and returns.
04:08.802 --> 04:17.112
[SPEAKER_00]: So first higher return potential private equity businesses aren't subject to public market volatility and quarterly earning reports.
04:17.572 --> 04:22.879
[SPEAKER_00]: You're betting on the operator skill,
04:22.859 --> 04:25.803
[SPEAKER_00]: not whether Jerome Powell said something that spoke traders.
04:26.183 --> 04:31.570
[SPEAKER_00]: Now, to be clear, higher returns typically come with higher risk, and that's the case here.
04:31.830 --> 04:33.392
[SPEAKER_00]: Remember those things you're betting on.
04:33.632 --> 04:35.875
[SPEAKER_00]: What if the operator isn't as skilled as you thought?
04:36.115 --> 04:39.019
[SPEAKER_00]: What if you didn't understand the business model as well as you thought?
04:39.319 --> 04:42.783
[SPEAKER_00]: What if the market fundamentals of that industry end up taking a turn?
04:43.044 --> 04:50.773
[SPEAKER_00]: The same things that make this a desired asset category could also be the downfall if your diligence isn't thorough.
04:50.753 --> 05:06.839
[SPEAKER_00]: But now the second reason the ultra wealthy like private equity is active involvement, unlike buying shares of Apple with private equity, it's more realistic that you'll be able to influence strategy, add value through your expertise, and have direct relationships with operators.
05:07.259 --> 05:08.982
[SPEAKER_00]: I've been on both sides of this.
05:09.282 --> 05:14.490
[SPEAKER_00]: Early in my career, I was the operator, the executive building companies that went through IPOs.
05:15.372 --> 05:18.256
[SPEAKER_00]: I've also raised two private equity funds totaling $15 million.
05:18.977 --> 05:23.845
[SPEAKER_00]: Now, I'm also a LP, limited partner who invests in other people's deals.
05:24.286 --> 05:28.913
[SPEAKER_00]: I've learned what good operators look like versus the ones who are just selling a dream on LinkedIn.
05:29.173 --> 05:29.975
[SPEAKER_00]: And here's what I know.
05:30.215 --> 05:34.221
[SPEAKER_00]: The best private equity operators aren't advertising on social media.
05:34.342 --> 05:37.146
[SPEAKER_00]: They're established firms with track records.
05:37.126 --> 05:42.756
[SPEAKER_00]: often from before 2012 when regulations changed to allow public advertising.
05:42.856 --> 05:46.263
[SPEAKER_00]: Now, if you're interested in private equity, here's some places to start.
05:46.623 --> 05:52.113
[SPEAKER_00]: First, private equity funds where professional managers handle deals sourcing and operation.
05:52.414 --> 05:59.286
[SPEAKER_00]: Second, syndicated deals where you can invest alongside experienced operators in specific businesses.
05:59.266 --> 06:03.192
[SPEAKER_00]: Third, direct investment, meaning you're buying part of the whole business.
06:03.552 --> 06:09.100
[SPEAKER_00]: But only do this if you have operating expertise and can add value beyond capital.
06:09.361 --> 06:16.892
[SPEAKER_00]: In fourth, venture capital, which is higher risk, but can offer outside returns if you're investing in early stage companies.
06:17.192 --> 06:24.463
[SPEAKER_00]: Here's the key point.
06:24.443 --> 06:30.713
[SPEAKER_00]: more control in similar to real estate, diversification from public market volatility.
06:30.974 --> 06:32.316
[SPEAKER_00]: Now here's where it gets interesting.
06:32.536 --> 06:37.605
[SPEAKER_00]: Public equities stocks make up only 23% of the portfolio.
06:38.246 --> 06:44.276
[SPEAKER_00]: Not 60%, not 70%, 23%, let that sink in for a second.
06:44.516 --> 06:49.725
[SPEAKER_00]: The asset class that financial advisors tell you should be the core of your portfolio,
06:49.705 --> 06:52.852
[SPEAKER_00]: ultra wealthy investors treat it as a supporting role.
06:53.233 --> 06:53.794
[SPEAKER_00]: Why is that?
06:54.235 --> 07:00.630
[SPEAKER_00]: Because public equities serve a specific purpose in their portfolio, liquidity and opportunistic growth.
07:01.051 --> 07:02.033
[SPEAKER_00]: Let's look at each of these.
07:02.775 --> 07:03.978
[SPEAKER_00]: First, liquidity.
07:04.319 --> 07:06.263
[SPEAKER_00]: Stocks can be sold immediately.
07:06.243 --> 07:11.574
[SPEAKER_00]: If you need $100,000 next week, you can sell some shares and have cash in your account quickly.
07:11.894 --> 07:14.981
[SPEAKER_00]: Try doing that with a rental property or a private equity investment.
07:15.382 --> 07:15.963
[SPEAKER_00]: You can't.
07:16.404 --> 07:18.909
[SPEAKER_00]: Second, passive exposure to growth.
07:19.249 --> 07:23.799
[SPEAKER_00]: The S&P 500 has averaged about 10% annual returns over the long term.
07:23.819 --> 07:24.841
[SPEAKER_00]: That's solid growth.
07:25.221 --> 07:26.985
[SPEAKER_00]: But notice what's missing.
07:26.965 --> 07:31.954
[SPEAKER_00]: cash flow, you're betting on price appreciation alone, not income generation.
07:32.134 --> 07:36.241
[SPEAKER_00]: That's why it's a component of the portfolio, not the engine.
07:36.501 --> 07:37.503
[SPEAKER_00]: Here's the key point.
07:37.824 --> 07:45.717
[SPEAKER_00]: Ultra wealthy investors allocate 23% to public equities for liquidity and growth, not as the core of their income engine.
07:45.697 --> 07:48.102
[SPEAKER_00]: Now let's quickly cover the supporting allocations.
07:48.403 --> 07:50.407
[SPEAKER_00]: Cash makes 9% of the portfolio.
07:50.727 --> 07:51.709
[SPEAKER_00]: This is dry powder.
07:52.290 --> 07:55.196
[SPEAKER_00]: Money ready to deploy when opportunities arise.
07:55.457 --> 07:57.461
[SPEAKER_00]: Fixed income investments come in at 7%.
07:57.521 --> 08:02.912
[SPEAKER_00]: These are things like Treasury bills, Treasury notes, corporate bonds, and municipal bonds.
08:02.892 --> 08:12.367
[SPEAKER_00]: And the last 5% includes hedge funds at 2% commodities at 1% currencies at 1% and miscellaneous investments at 1%.
08:12.728 --> 08:20.821
[SPEAKER_00]: These are specialty allocations that serve specific purposes like inflation protection through commodities or hedge strategies.
08:21.262 --> 08:28.714
[SPEAKER_00]: This is how the ultra wealthy investors
08:28.880 --> 08:29.321
[SPEAKER_00]: data.
08:29.601 --> 08:34.049
[SPEAKER_00]: So, how could you model your portfolio to mirror how the ultra-wealthy allocate?
08:34.390 --> 08:36.594
[SPEAKER_00]: Here's what's critical to understand first.
08:36.915 --> 08:39.079
[SPEAKER_00]: You cannot flip this allocation overnight.
08:39.399 --> 08:52.423
[SPEAKER_00]: For example, if you currently have 80% of your wealth in your company stock and you're trying to sell it all at once, you'll get hit with the massive tax bill, have no plan for redeploying the capital, and you'll certainly walk away with regret.
08:52.403 --> 08:56.751
[SPEAKER_00]: Instead, before making any moves, you need a systematic approach.
08:57.072 --> 09:00.738
[SPEAKER_00]: This is where what I call the architect phase becomes critical.
09:01.019 --> 09:04.525
[SPEAKER_00]: The architect phase is about designing before building.
09:04.726 --> 09:07.170
[SPEAKER_00]: You'll create three foundational documents.
09:07.651 --> 09:09.855
[SPEAKER_00]: First, your legacy statement.
09:09.835 --> 09:13.059
[SPEAKER_00]: This defines your why and long-term vision for your wealth.
09:13.339 --> 09:27.054
[SPEAKER_00]: It transforms wealth management from reactive and overwhelming into purposeful and systematic by establishing clear objectives that guide every financial decision rather than just a collection of assets.
09:27.335 --> 09:33.902
[SPEAKER_00]: Your portfolio becomes a strategic tool for achieving your life's vision, whether that's generational wealth,
09:33.882 --> 09:38.829
[SPEAKER_00]: philanthropy, financial independence, or creating opportunities for your family.
09:39.169 --> 09:40.591
[SPEAKER_00]: Rood it in your values.
09:41.152 --> 09:45.658
[SPEAKER_00]: It provides the clarity that makes you significantly more likely to achieve your goals.
09:45.979 --> 09:47.921
[SPEAKER_00]: The second, your investment thesis.
09:48.222 --> 09:52.648
[SPEAKER_00]: This is your strategic playbook for how you'll grow and protect wealth over time.
09:52.888 --> 09:58.776
[SPEAKER_00]: It defines your asset classes, risk tolerance, liquidity targets, and diversification strategy.
09:58.756 --> 10:10.472
[SPEAKER_00]: creating clear criteria for evaluating every investment opportunity, so instead of winning it, you'll have conviction in a framework for informed decisions aligned with your long-term objectives.
10:11.053 --> 10:20.906
[SPEAKER_00]: And the third is your assessment, an honest evaluation of where you are right now, your liquidity tax position, risk exposure, and operational readiness.
10:21.166 --> 10:23.329
[SPEAKER_00]: With these three pieces in place,
10:23.309 --> 10:27.194
[SPEAKER_00]: You're not gambling with your financial future, you're executing a plan.
10:27.374 --> 10:34.303
[SPEAKER_00]: The transition becomes methodical, tax-efficient, and aligned with your long-term goals, not a panic-driven fire sale.
10:34.663 --> 10:35.785
[SPEAKER_00]: So let me leave you with this.
10:36.205 --> 10:41.452
[SPEAKER_00]: The allocations we reviewed are just the output of a systematic approach to wealth.
10:41.692 --> 10:43.354
[SPEAKER_00]: The structure isn't magic.
10:43.374 --> 10:45.877
[SPEAKER_00]: It's not a secret formula that guarantees wealth.
10:45.897 --> 10:53.046
[SPEAKER_00]: What it represents is a philosophy.
10:53.026 --> 11:02.066
[SPEAKER_00]: not just different public stocks, and your portfolio should align with your goals and managing wealth as a business, not a hobby.
11:02.086 --> 11:11.727
[SPEAKER_00]: Most high earners spend their entire career building wealth like a machine systematically, strategically, with clear goals, but they manage that wealth like amateurs.
11:11.707 --> 11:15.794
[SPEAKER_00]: scattered, reactive, hoping their advisor knows what they're doing.
11:16.014 --> 11:19.721
[SPEAKER_00]: The real question is, are you willing to manage your wealth like a business?
11:20.102 --> 11:29.758
[SPEAKER_00]: Are you willing to treat your portfolio the same way you treat a company you are running with a clear strategy, defined systems, measurable goals, and accountability?
11:29.778 --> 11:35.368
[SPEAKER_00]: Because if you are, you don't need $100 million to implement the family office principles.
11:35.348 --> 11:37.230
[SPEAKER_00]: you need a framework.
11:37.250 --> 11:40.775
[SPEAKER_00]: And that's exactly what I want to help you build in our upcoming live workshop.
11:41.075 --> 11:48.765
[SPEAKER_00]: If you're ready to take the role of CEO of your wealth, head over to wealthops.io forward slash go to register now.
11:49.046 --> 11:54.853
[SPEAKER_00]: I will walk you through the entire architecture phase and lead you with a clear road map of your wealth journey.
11:54.993 --> 12:01.862
[SPEAKER_00]: But if you're not ready for that and just want to keep learning about microfamily offices, why don't you check out this video next.
00:00.031 --> 00:08.579
[SPEAKER_00]: Did you know then investors with $20 million or more put only 23% of their portfolio in public stocks and 7% in bonds?
00:08.720 --> 00:14.125
[SPEAKER_00]: Well, most financial advisors tell you to put 60% in stocks in 40% in bonds.
00:14.365 --> 00:22.013
[SPEAKER_00]: In this video, I'm going to share how the ultra wealthy allocate the other 70% of their portfolio and how you can model them.
00:22.033 --> 00:25.296
[SPEAKER_00]: I'm Christopher Nelson and I started following this approach years ago.
00:25.276 --> 00:37.681
[SPEAKER_00]: It helped me transition from a traditional portfolio that was over concentrated in a single stock to one that generates now over $200,000 per year in cash flow, while still growing the portfolio value.
00:37.861 --> 00:41.889
[SPEAKER_00]: So let's start with the number one asset, the ultra wealthy allocate too.
00:42.090 --> 00:43.352
[SPEAKER_00]: But first,
00:43.332 --> 00:45.033
[SPEAKER_00]: Where did these numbers come from?
00:45.374 --> 00:50.138
[SPEAKER_00]: Well, I pulled them from the Q4 2024 report from Tiger 21.
00:50.158 --> 00:52.440
[SPEAKER_00]: I'm going to put a link to that in the description.
00:52.620 --> 00:58.926
[SPEAKER_00]: Tiger 21 is a private network that requires a minimum of $20 million in investable assets to join.
00:59.246 --> 01:02.248
[SPEAKER_00]: Members share their actual portfolio allocations quarterly.
01:02.629 --> 01:04.090
[SPEAKER_00]: So this isn't theory.
01:04.711 --> 01:05.531
[SPEAKER_00]: This is real money.
01:05.792 --> 01:12.177
[SPEAKER_00]: Now that we know that the data sources legit, let's unpack their number one portfolio holding real estate.
01:12.317 --> 01:13.238
[SPEAKER_00]: That's right.
01:13.218 --> 01:20.026
[SPEAKER_00]: not stocks, not bonds real estate, and it makes up 28% of their portfolio.
01:20.226 --> 01:23.670
[SPEAKER_00]: And this makes total sense when you understand what real estate provides.
01:23.990 --> 01:25.652
[SPEAKER_00]: First, it gives you income.
01:25.913 --> 01:40.930
[SPEAKER_00]: Real estate can generate monthly cash flow, whether it's single family rentals, multifamily properties, commercial real estate, industrial buildings, you're collecting rent checks that hit your account every single month.
01:40.910 --> 01:42.892
[SPEAKER_00]: This is income-producing wealth.
01:43.393 --> 01:47.398
[SPEAKER_00]: It's not just a number on a screen that goes up and down based on market sentiment.
01:47.638 --> 01:50.422
[SPEAKER_00]: It's actual cash that you can use to cover your expenses.
01:50.782 --> 01:54.227
[SPEAKER_00]: Second is appreciation potential in tax advantages.
01:54.687 --> 02:01.095
[SPEAKER_00]: Beyond the long-term growth from property appreciation, the most significant advantage is found in the tax benefits.
02:01.143 --> 02:07.770
[SPEAKER_00]: Even though the building is increasing in value, the IRS allows you to record a depreciation expense.
02:07.790 --> 02:13.476
[SPEAKER_00]: This deduction, which is purely a paper loss, can be used to offset your rental income.
02:13.637 --> 02:17.681
[SPEAKER_00]: This turns profitable cash flow into a low or zero tax event.
02:17.861 --> 02:23.387
[SPEAKER_00]: This depreciation gold mine is a massive unique accelerator for your after tax return.
02:23.627 --> 02:25.790
[SPEAKER_00]: Third, it's an inflation hedge.
02:26.130 --> 02:27.792
[SPEAKER_00]: As inflation rises,
02:27.772 --> 02:37.452
[SPEAKER_00]: Generally, so-do rents and property values, real estate naturally protects your wealth against currency devaluation, and fourth, diversification from market volatility.
02:37.692 --> 02:40.739
[SPEAKER_00]: Real estate does not move in lockstep with the stock market.
02:40.959 --> 02:47.232
[SPEAKER_00]: When stocks take a nose dive, I rental properties keep generating the same amount of cash flow every single month.
02:47.330 --> 02:52.700
[SPEAKER_00]: Now, if you're looking at really state to your portfolio, here are a few avenues that you can explore.
02:52.920 --> 02:59.552
[SPEAKER_00]: First, there's direct ownership, which just means buying properties yourself, like a single family home for renting.
02:59.893 --> 03:08.809
[SPEAKER_00]: Second, there's real estate syndications where you pool money with other investors to purchase a single asset, larger deals.
03:08.829 --> 03:11.093
[SPEAKER_00]: The third is real estate funds.
03:11.073 --> 03:14.258
[SPEAKER_00]: professionally managed portfolios that handle everything for you.
03:14.518 --> 03:23.853
[SPEAKER_00]: In fourth, there's REITs real estate investment trusts, though keep in mind these trade on the stock market so they move in lockstep with public equities.
03:24.153 --> 03:25.395
[SPEAKER_00]: Here's the key point.
03:25.415 --> 03:33.908
[SPEAKER_00]: All tool wealthy investors allocate 28% to real estate because it's the best asset class for generating tax advantage income,
03:33.888 --> 03:35.371
[SPEAKER_00]: while building equity.
03:35.611 --> 03:39.698
[SPEAKER_00]: Now, also coming in with 28% of the portfolio is private equity.
03:39.858 --> 03:47.111
[SPEAKER_00]: When most people here private equity, they think it's only for institutional investors or ultra wealthy families, but that's not true anymore.
03:47.131 --> 03:51.658
[SPEAKER_00]: Private equity simply means ownership in private operating businesses.
03:52.059 --> 03:55.525
[SPEAKER_00]: This could be investing in a friend's manufacturing business.
03:55.505 --> 04:02.934
[SPEAKER_00]: joining a private equity fund buying into syndicated business opportunities or even owning part of a local car wash chain.
04:03.014 --> 04:08.381
[SPEAKER_00]: The reason ultra wealthy investors love private equity is control and returns.
04:08.802 --> 04:17.112
[SPEAKER_00]: So first higher return potential private equity businesses aren't subject to public market volatility and quarterly earning reports.
04:17.572 --> 04:22.879
[SPEAKER_00]: You're betting on the operator skill,
04:22.859 --> 04:25.803
[SPEAKER_00]: not whether Jerome Powell said something that spoke traders.
04:26.183 --> 04:31.570
[SPEAKER_00]: Now, to be clear, higher returns typically come with higher risk, and that's the case here.
04:31.830 --> 04:33.392
[SPEAKER_00]: Remember those things you're betting on.
04:33.632 --> 04:35.875
[SPEAKER_00]: What if the operator isn't as skilled as you thought?
04:36.115 --> 04:39.019
[SPEAKER_00]: What if you didn't understand the business model as well as you thought?
04:39.319 --> 04:42.783
[SPEAKER_00]: What if the market fundamentals of that industry end up taking a turn?
04:43.044 --> 04:50.773
[SPEAKER_00]: The same things that make this a desired asset category could also be the downfall if your diligence isn't thorough.
04:50.753 --> 05:06.839
[SPEAKER_00]: But now the second reason the ultra wealthy like private equity is active involvement, unlike buying shares of Apple with private equity, it's more realistic that you'll be able to influence strategy, add value through your expertise, and have direct relationships with operators.
05:07.259 --> 05:08.982
[SPEAKER_00]: I've been on both sides of this.
05:09.282 --> 05:14.490
[SPEAKER_00]: Early in my career, I was the operator, the executive building companies that went through IPOs.
05:15.372 --> 05:18.256
[SPEAKER_00]: I've also raised two private equity funds totaling $15 million.
05:18.977 --> 05:23.845
[SPEAKER_00]: Now, I'm also a LP, limited partner who invests in other people's deals.
05:24.286 --> 05:28.913
[SPEAKER_00]: I've learned what good operators look like versus the ones who are just selling a dream on LinkedIn.
05:29.173 --> 05:29.975
[SPEAKER_00]: And here's what I know.
05:30.215 --> 05:34.221
[SPEAKER_00]: The best private equity operators aren't advertising on social media.
05:34.342 --> 05:37.146
[SPEAKER_00]: They're established firms with track records.
05:37.126 --> 05:42.756
[SPEAKER_00]: often from before 2012 when regulations changed to allow public advertising.
05:42.856 --> 05:46.263
[SPEAKER_00]: Now, if you're interested in private equity, here's some places to start.
05:46.623 --> 05:52.113
[SPEAKER_00]: First, private equity funds where professional managers handle deals sourcing and operation.
05:52.414 --> 05:59.286
[SPEAKER_00]: Second, syndicated deals where you can invest alongside experienced operators in specific businesses.
05:59.266 --> 06:03.192
[SPEAKER_00]: Third, direct investment, meaning you're buying part of the whole business.
06:03.552 --> 06:09.100
[SPEAKER_00]: But only do this if you have operating expertise and can add value beyond capital.
06:09.361 --> 06:16.892
[SPEAKER_00]: In fourth, venture capital, which is higher risk, but can offer outside returns if you're investing in early stage companies.
06:17.192 --> 06:24.463
[SPEAKER_00]: Here's the key point.
06:24.443 --> 06:30.713
[SPEAKER_00]: more control in similar to real estate, diversification from public market volatility.
06:30.974 --> 06:32.316
[SPEAKER_00]: Now here's where it gets interesting.
06:32.536 --> 06:37.605
[SPEAKER_00]: Public equities stocks make up only 23% of the portfolio.
06:38.246 --> 06:44.276
[SPEAKER_00]: Not 60%, not 70%, 23%, let that sink in for a second.
06:44.516 --> 06:49.725
[SPEAKER_00]: The asset class that financial advisors tell you should be the core of your portfolio,
06:49.705 --> 06:52.852
[SPEAKER_00]: ultra wealthy investors treat it as a supporting role.
06:53.233 --> 06:53.794
[SPEAKER_00]: Why is that?
06:54.235 --> 07:00.630
[SPEAKER_00]: Because public equities serve a specific purpose in their portfolio, liquidity and opportunistic growth.
07:01.051 --> 07:02.033
[SPEAKER_00]: Let's look at each of these.
07:02.775 --> 07:03.978
[SPEAKER_00]: First, liquidity.
07:04.319 --> 07:06.263
[SPEAKER_00]: Stocks can be sold immediately.
07:06.243 --> 07:11.574
[SPEAKER_00]: If you need $100,000 next week, you can sell some shares and have cash in your account quickly.
07:11.894 --> 07:14.981
[SPEAKER_00]: Try doing that with a rental property or a private equity investment.
07:15.382 --> 07:15.963
[SPEAKER_00]: You can't.
07:16.404 --> 07:18.909
[SPEAKER_00]: Second, passive exposure to growth.
07:19.249 --> 07:23.799
[SPEAKER_00]: The S&P 500 has averaged about 10% annual returns over the long term.
07:23.819 --> 07:24.841
[SPEAKER_00]: That's solid growth.
07:25.221 --> 07:26.985
[SPEAKER_00]: But notice what's missing.
07:26.965 --> 07:31.954
[SPEAKER_00]: cash flow, you're betting on price appreciation alone, not income generation.
07:32.134 --> 07:36.241
[SPEAKER_00]: That's why it's a component of the portfolio, not the engine.
07:36.501 --> 07:37.503
[SPEAKER_00]: Here's the key point.
07:37.824 --> 07:45.717
[SPEAKER_00]: Ultra wealthy investors allocate 23% to public equities for liquidity and growth, not as the core of their income engine.
07:45.697 --> 07:48.102
[SPEAKER_00]: Now let's quickly cover the supporting allocations.
07:48.403 --> 07:50.407
[SPEAKER_00]: Cash makes 9% of the portfolio.
07:50.727 --> 07:51.709
[SPEAKER_00]: This is dry powder.
07:52.290 --> 07:55.196
[SPEAKER_00]: Money ready to deploy when opportunities arise.
07:55.457 --> 07:57.461
[SPEAKER_00]: Fixed income investments come in at 7%.
07:57.521 --> 08:02.912
[SPEAKER_00]: These are things like Treasury bills, Treasury notes, corporate bonds, and municipal bonds.
08:02.892 --> 08:12.367
[SPEAKER_00]: And the last 5% includes hedge funds at 2% commodities at 1% currencies at 1% and miscellaneous investments at 1%.
08:12.728 --> 08:20.821
[SPEAKER_00]: These are specialty allocations that serve specific purposes like inflation protection through commodities or hedge strategies.
08:21.262 --> 08:28.714
[SPEAKER_00]: This is how the ultra wealthy investors
08:28.880 --> 08:29.321
[SPEAKER_00]: data.
08:29.601 --> 08:34.049
[SPEAKER_00]: So, how could you model your portfolio to mirror how the ultra-wealthy allocate?
08:34.390 --> 08:36.594
[SPEAKER_00]: Here's what's critical to understand first.
08:36.915 --> 08:39.079
[SPEAKER_00]: You cannot flip this allocation overnight.
08:39.399 --> 08:52.423
[SPEAKER_00]: For example, if you currently have 80% of your wealth in your company stock and you're trying to sell it all at once, you'll get hit with the massive tax bill, have no plan for redeploying the capital, and you'll certainly walk away with regret.
08:52.403 --> 08:56.751
[SPEAKER_00]: Instead, before making any moves, you need a systematic approach.
08:57.072 --> 09:00.738
[SPEAKER_00]: This is where what I call the architect phase becomes critical.
09:01.019 --> 09:04.525
[SPEAKER_00]: The architect phase is about designing before building.
09:04.726 --> 09:07.170
[SPEAKER_00]: You'll create three foundational documents.
09:07.651 --> 09:09.855
[SPEAKER_00]: First, your legacy statement.
09:09.835 --> 09:13.059
[SPEAKER_00]: This defines your why and long-term vision for your wealth.
09:13.339 --> 09:27.054
[SPEAKER_00]: It transforms wealth management from reactive and overwhelming into purposeful and systematic by establishing clear objectives that guide every financial decision rather than just a collection of assets.
09:27.335 --> 09:33.902
[SPEAKER_00]: Your portfolio becomes a strategic tool for achieving your life's vision, whether that's generational wealth,
09:33.882 --> 09:38.829
[SPEAKER_00]: philanthropy, financial independence, or creating opportunities for your family.
09:39.169 --> 09:40.591
[SPEAKER_00]: Rood it in your values.
09:41.152 --> 09:45.658
[SPEAKER_00]: It provides the clarity that makes you significantly more likely to achieve your goals.
09:45.979 --> 09:47.921
[SPEAKER_00]: The second, your investment thesis.
09:48.222 --> 09:52.648
[SPEAKER_00]: This is your strategic playbook for how you'll grow and protect wealth over time.
09:52.888 --> 09:58.776
[SPEAKER_00]: It defines your asset classes, risk tolerance, liquidity targets, and diversification strategy.
09:58.756 --> 10:10.472
[SPEAKER_00]: creating clear criteria for evaluating every investment opportunity, so instead of winning it, you'll have conviction in a framework for informed decisions aligned with your long-term objectives.
10:11.053 --> 10:20.906
[SPEAKER_00]: And the third is your assessment, an honest evaluation of where you are right now, your liquidity tax position, risk exposure, and operational readiness.
10:21.166 --> 10:23.329
[SPEAKER_00]: With these three pieces in place,
10:23.309 --> 10:27.194
[SPEAKER_00]: You're not gambling with your financial future, you're executing a plan.
10:27.374 --> 10:34.303
[SPEAKER_00]: The transition becomes methodical, tax-efficient, and aligned with your long-term goals, not a panic-driven fire sale.
10:34.663 --> 10:35.785
[SPEAKER_00]: So let me leave you with this.
10:36.205 --> 10:41.452
[SPEAKER_00]: The allocations we reviewed are just the output of a systematic approach to wealth.
10:41.692 --> 10:43.354
[SPEAKER_00]: The structure isn't magic.
10:43.374 --> 10:45.877
[SPEAKER_00]: It's not a secret formula that guarantees wealth.
10:45.897 --> 10:53.046
[SPEAKER_00]: What it represents is a philosophy.
10:53.026 --> 11:02.066
[SPEAKER_00]: not just different public stocks, and your portfolio should align with your goals and managing wealth as a business, not a hobby.
11:02.086 --> 11:11.727
[SPEAKER_00]: Most high earners spend their entire career building wealth like a machine systematically, strategically, with clear goals, but they manage that wealth like amateurs.
11:11.707 --> 11:15.794
[SPEAKER_00]: scattered, reactive, hoping their advisor knows what they're doing.
11:16.014 --> 11:19.721
[SPEAKER_00]: The real question is, are you willing to manage your wealth like a business?
11:20.102 --> 11:29.758
[SPEAKER_00]: Are you willing to treat your portfolio the same way you treat a company you are running with a clear strategy, defined systems, measurable goals, and accountability?
11:29.778 --> 11:35.368
[SPEAKER_00]: Because if you are, you don't need $100 million to implement the family office principles.
11:35.348 --> 11:37.230
[SPEAKER_00]: you need a framework.
11:37.250 --> 11:40.775
[SPEAKER_00]: And that's exactly what I want to help you build in our upcoming live workshop.
11:41.075 --> 11:48.765
[SPEAKER_00]: If you're ready to take the role of CEO of your wealth, head over to wealthops.io forward slash go to register now.
11:49.046 --> 11:54.853
[SPEAKER_00]: I will walk you through the entire architecture phase and lead you with a clear road map of your wealth journey.
11:54.993 --> 12:01.862
[SPEAKER_00]: But if you're not ready for that and just want to keep learning about microfamily offices, why don't you check out this video next.
