Ever wonder where rich Bogleheads are stashing their money?

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Lbill
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Ever wonder where rich Bogleheads are stashing their money?

Post by Lbill » Fri Jun 24, 2011 10:47 am

According to the annual World Wealth Report from consultants Cap Gemini and Merrill Lynch Wealth Management, here's how the Rich Folks are allocating their money these days:

Equities - 33%
Bonds - 29%
Real Estate - 15%
Cash - 14%
Alternatives - 5%

Don't know where the missing 4% is. Just goes to show that even rich people aren't wild about stocks these days either. Wonder what the rich Bogleheads are doing? If you're an RB, perhaps you can share with the rest of us Little People. :)

http://www.marketwatch.com/story/where- ... e_carousel
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sport
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Re: Ever wonder where rich Bogleheads are stashing their mon

Post by sport » Fri Jun 24, 2011 10:56 am

Lbill wrote: Just goes to show that even rich people aren't wild about stocks these days either.
When you "have it made", there is less incentive to take a lot of risk.

Jeff

norm
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Post by norm » Fri Jun 24, 2011 11:00 am

If you're asking me you areasking the wrong person.

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Post by FafnerMorell » Fri Jun 24, 2011 11:09 am

Well, a logical conclusion would be that the rich allocate more money to equities than any other single asset.

I'm guessing the missing 4% is either yachts or black helicopters.

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nisiprius
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Post by nisiprius » Fri Jun 24, 2011 11:22 am

1) It's pretty meaningless if we don't know the age of those rich people and what "life stage" they are in.

2) Since I am not a HNWI there's not much value to me anyway in knowing how HNWI's invest. The kind of bicycle Lance Armstrong rides would make my back ache and blister my butt, and his investments probably would, too.

3) It's global. I really have no idea what factors such as tax laws might affect investors outside the U.S.

4) Ooooh, nice picture, that's purty, that's purty. Is that what life is really like for a HNWI? Whose backyard is that?

Image
Last edited by nisiprius on Fri Jun 24, 2011 11:23 am, edited 1 time in total.
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Re: Ever wonder where rich Bogleheads are stashing their mon

Post by dh » Fri Jun 24, 2011 11:23 am

jsl11 wrote:
Lbill wrote: Just goes to show that even rich people aren't wild about stocks these days either.
When you "have it made", there is less incentive to take a lot of risk.

Jeff
I think Larry stated something similar (a preemptive apology for my attempted paraphrase) -- if you have already won, then there is no reason to play the game.

I am surprised the wealthy (however it was defined) even have that much in equities.

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Post by GammaPoint » Fri Jun 24, 2011 11:39 am

If I were extremely wealthy I'd have more than that in equities I think.

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Quasimodo
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Post by Quasimodo » Fri Jun 24, 2011 11:40 am

Here's one possibility:

http://www.missilebases.com/properties

Some of the properties are not as expensive as I would have thought...

John
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DiscoBunny1979
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Post by DiscoBunny1979 » Fri Jun 24, 2011 11:49 am

The extra 4% is to pay for maids, yard care, protection services, insurance premiums, taxes on residential/investment property, auction prices for expensive art, cars, boats, yahts, jewelry, diamonds and other gem stones, gaming options (legal or under the table), drugs, personal spiritual advisors, etc.

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DiscoBunny1979
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Post by DiscoBunny1979 » Fri Jun 24, 2011 11:52 am

Quasimodo wrote:Here's one possibility:

http://www.missilebases.com/properties

Some of the properties are not as expensive as I would have thought...

John
--------------

You still have propety taxes at least 1% of value per year, insurance, additional insurance for flood/earthquake. . .so that $260,000 bunker or what ever it is paid in cash results in at least $4,000 of required expenditures per year just to pay for insurance/taxes.

Of course you could go for the most expensive listing at about 4 Million . . . which results in at least a 1% property tax of $40,000 a year. How does that sound?

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Random Musings
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Post by Random Musings » Fri Jun 24, 2011 12:18 pm

LBill wrote:
Don't know where the missing 4% is.
That's the 4% AUM portfolio fee charged by consultants Cap Gemini and Merrill Lynch Wealth Management.

RM

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Post by staythecourse » Fri Jun 24, 2011 12:32 pm

Sounds like a winning portfolio. A well diversified portfolio of somewhere around 33% equity/ 29% bonds/ 14% cash/ 20% altemative investments (real estate+ others).

If one did that with a low cost, low transaction indexing it would be a winning portfolio.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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gasman
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Post by gasman » Fri Jun 24, 2011 12:39 pm

It would be interesting to see how those numbers have changed over time, e.g. peak of the tech bubble, 2002 market bottom, etc.

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Quasimodo
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Post by Quasimodo » Fri Jun 24, 2011 12:57 pm

DiscoBunny1979 wrote:
Quasimodo wrote:Here's one possibility:

http://www.missilebases.com/properties

Some of the properties are not as expensive as I would have thought...

John
--------------

You still have propety taxes at least 1% of value per year, insurance, additional insurance for flood/earthquake. . .so that $260,000 bunker or what ever it is paid in cash results in at least $4,000 of required expenditures per year just to pay for insurance/taxes.

Of course you could go for the most expensive listing at about 4 Million . . . which results in at least a 1% property tax of $40,000 a year. How does that sound?
It sounds as though it's included in the expenses described in your earlier post, unless my tax adviser could figure something out.

John
Many wealthy people are little more than janitors of their possessions. | | Frank Lloyd Wright, architect (1867-1959)

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Post by dbr » Fri Jun 24, 2011 12:59 pm

staythecourse wrote:Sounds like a winning portfolio. A well diversified portfolio of somewhere around 33% equity/ 29% bonds/ 14% cash/ 20% altemative investments (real estate+ others).

If one did that with a low cost, low transaction indexing it would be a winning portfolio.

Good luck.
It is a little unclear what constitutes cash for these folks, but otherwise sounds, as you say, like pretty good investing. I would think that wealthy folks are also folks that are not young, so the stock allocation might be quite conventional. I also wonder if real estate is really real estate or real estate stocks (REITs). It would be entirely credible that we are talking apartment houses, shares in malls and office buildings, farmland, etc.

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Post by norookie » Fri Jun 24, 2011 1:26 pm

:D You know if Merill lynch is involved, clients are still getting screwed somehow.
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RE: property ... silos

Post by Nestegg_User » Fri Jun 24, 2011 2:14 pm

Having been in one of the one's east of Denver (decades after they were decommissioned) they need a lot of rehab ... but they are unique and I'm not surprised to see them offered as undeveloped properties.
Some might qualify as superfund sites, however, depending on their history (propellant used, etc) :shock:


P.S. Nisi... to me that picture looks like it is from Bushart Gardens in Victoria B.C.

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Post by NoRoboGuy » Fri Jun 24, 2011 2:19 pm

14% is a really high cash position - seems like waste of capital to have more than 5% or so there.
There is no free lunch.

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Post by Winthorpe » Fri Jun 24, 2011 2:21 pm

nisiprius wrote:4) Ooooh, nice picture, that's purty, that's purty. Is that what life is really like for a HNWI? Whose backyard is that?

Image
Hi Nisiprius,

I was wondering who those strangers were suspiciously photographing my backyard the other day as I gazed out from the deck off of my 17th bedroom. I had security remove the photographers when they began agitating the horses near my polo field.

Winthorpe

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Post by Don Robins » Fri Jun 24, 2011 2:22 pm

Gold Rolex watches. Thousands of them!

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Post by Grt2bOutdoors » Fri Jun 24, 2011 2:53 pm

louis c wrote:14% is a really high cash position - seems like waste of capital to have more than 5% or so there.
Most who are self-made rich got there by striking when the time was right - having liquidity when others don't allows one to name their own price. Imagine - buying a steak at 11.99lb, now something happens and you have no money to buy, in swoops a rich guy with his cash who scoops it up for 4.99lb. Buy low, sell high.
Or in this case, buy low and enjoy your filet mignon. I'll take mine rare please. :lol:

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Post by NoRoboGuy » Fri Jun 24, 2011 2:59 pm

GRT2BOUTDOORS wrote:
louis c wrote:14% is a really high cash position - seems like waste of capital to have more than 5% or so there.
Most who are self-made rich got there by striking when the time was right - having liquidity when others don't allows one to name their own price. Imagine - buying a steak at 11.99lb, now something happens and you have no money to buy, in swoops a rich guy with his cash who scoops it up for 4.99lb. Buy low, sell high.
Or in this case, buy low and enjoy your filet mignon. I'll take mine rare please. :lol:
This rings true if you take away the opportunity cost of having that cash earn more while you wait. It probably makes little difference at that wealth point anyway.
There is no free lunch.

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Post by chaz » Fri Jun 24, 2011 3:27 pm

They invest at Vanguard unless their money manager places it elsewhere.
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Post by Zhen » Fri Jun 24, 2011 5:52 pm

Checking the original report, I find the real estate portion is 19%, not 15%.

http://www.capgemini.com/services-and-s ... llocation/

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Post by steve roy » Fri Jun 24, 2011 6:18 pm

Winthorpe wrote:
nisiprius wrote:4) Ooooh, nice picture, that's purty, that's purty. Is that what life is really like for a HNWI? Whose backyard is that?

Image
Hi Nisiprius,

I was wondering who those strangers were suspiciously photographing my backyard the other day as I gazed out from the deck off of my 17th bedroom. I had security remove the photographers when they began agitating the horses near my polo field.

Winthorpe
Hmm. I had no idea you lived in Butchart Gardens in Victoria, B.C. Good to know.

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Post by VennData » Fri Jun 24, 2011 7:25 pm

staythecourse wrote:Sounds like a winning portfolio.
Yes, sounds like a Boglehead portfolio. So where are the advisor's yachts?!

Anyway, since the rich control such a huge portion of global wealth...

http://blogs.wsj.com/wealth/2011/05/31/ ... ds-wealth/

...their portfolio must be "the market."
Lbill wrote:Don't know where the missing 4% is
The missing 4% is deferred taxes.

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Post by Dinero » Fri Jun 24, 2011 7:37 pm

Hmm. I had no idea you lived in Butchart Gardens in Victoria, B.C. Good to know.
See what lime can (could) buy? He made a fortune in cement. That looks pretty good for a recycled quarry:D

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nisiprius
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Post by nisiprius » Fri Jun 24, 2011 9:49 pm

steve roy wrote:Hmm. I had no idea you lived in Butchart Gardens in Victoria, B.C. Good to know.
I love this forum! I was hoping someone would know.
Image
Image
Are these really real, or is Butchart Gardens actually made of Lego? Thomas Kinkade, Painter of Light® on LSD!
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Post by bearwolf » Fri Jun 24, 2011 10:05 pm

nisiprius wrote:Are these really real, or is Butchart Gardens actually made of Lego? Thomas Kinkade, Painter of Light® on LSD!
They are real. We just went to Buchart Gardens on our way back from alaska. Although I can't vouch for the spelling the gardens are beautiful.

Also the missing 4% is the 4% they have taken out for the SWR I'm surprised so many bogleheads missed that

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Post by steve roy » Fri Jun 24, 2011 10:24 pm

nisiprius:

The sunken gardens are kind of hard to miss. Especially if you've been there in the last couple of months photographing them.

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Post by jh » Sat Jun 25, 2011 9:56 am

...
Last edited by jh on Fri Jul 01, 2011 10:01 pm, edited 1 time in total.

staythecourse
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Post by staythecourse » Sat Jun 25, 2011 11:02 am

jh wrote:For more specific info on HNWI in North America go here:

http://www.capgemini.com/services-and-s ... _namerica/

A few items of note from the page:

North America remained the single largest home to HNWIs, with its 3.4 million HNWIs accounting for 31% of the global HNWI population.

HNWIs from North America have long favored equities as an asset class and they held 42% of all holdings in equities at the end of 2010, up from 36% at the end of 2009 and above the global average of 33%.

HNWIs from North America had a much higher-than-average allocation to commodities (30% of alternative investments).

North American HNWIs had 76% of their assets in home region investments in 2010, unchanged from a year earlier. That figure is expected to drop to 68% by the end of 2012 as North American HNWIs redistribute assets toward emerging markets to capture higher returns and toward alternative developed markets to diversify their risks.

There were 40k Ultra-HNWIs in North America during 2010, which represented 1.2% of the region’s HNWI total. North America still has the largest regional number of Ultra-HNWIs, totaling 40k in 2010, up from 36k in 2009 (but remains down from 41k in 2007).
Thanks for sharing that info. It is very interesting to see how centric U.S. is on equity investments as opposed to the rest of the world, especially U.S. equities. Is financial porn stronger here then elsewhere in the world?
I am assuming that 42% is all equities and not just U.S. equities.

We seem to love equities more then any other country. I'm going to have to mull that implication out.

Good luck.
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Post by nisiprius » Sat Jun 25, 2011 12:54 pm

How do you pronounce "HNWI?"
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Post by Puakinekine » Sat Jun 25, 2011 1:07 pm

nisiprius wrote:
steve roy wrote:Hmm. I had no idea you lived in Butchart Gardens in Victoria, B.C. Good to know.
I love this forum! I was hoping someone would know.
Image
Image
Are these really real, or is Butchart Gardens actually made of Lego? Thomas Kinkade, Painter of Light® on LSD!
Thirty years ago, or so, you could sail (or power) into a little cove in the gardens and moor or anchor-- I can't remember which. The gardens were lit up with fairy lights at night and empty of people in the early morning, which made walks after coffee and salmon for breakfast a delight. I don't know if you can still do any of that.

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Post by mr_bunny » Sat Jun 25, 2011 11:30 pm

nisiprius wrote:4) Ooooh, nice picture, that's purty, that's purty. Is that what life is really like for a HNWI? Whose backyard is that?
Robert Butchart (1856–1943).

It's a piece of clipart http://www.istockphoto.com/stock-photo- ... garden.php taken at the Buthcart Gardens in Victoria, BC.

In particular, it appears to be from the Sunken Garden area http://en.wikipedia.org/wiki/Butchart_Gardens.

Tineye image search is awesome.
- Chris

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Post by LH » Sat Jun 25, 2011 11:48 pm

gasman wrote:It would be interesting to see how those numbers have changed over time, e.g. peak of the tech bubble, 2002 market bottom, etc.
Bingo.

Do not conflate being rich with being an astute investor.

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Post by bearwolf » Sun Jun 26, 2011 12:23 am

Puakinekine wrote: Thirty years ago, or so, you could sail (or power) into a little cove in the gardens and moor or anchor-- I can't remember which. The gardens were lit up with fairy lights at night and empty of people in the early morning, which made walks after coffee and salmon for breakfast a delight. I don't know if you can still do any of that.
The cove is still there and there were boats moored in it when we were there in June. I don't know who owned them or who is allowed to come in that way.

BearWolf

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Post by Midwest_Investor » Sun Jun 26, 2011 11:17 am

steve roy wrote:
Winthorpe wrote:
nisiprius wrote:4) Ooooh, nice picture, that's purty, that's purty. Is that what life is really like for a HNWI? Whose backyard is that?

Image
Hi Nisiprius,

I was wondering who those strangers were suspiciously photographing my backyard the other day as I gazed out from the deck off of my 17th bedroom. I had security remove the photographers when they began agitating the horses near my polo field.

Winthorpe
Hmm. I had no idea you lived in Butchart Gardens in Victoria, B.C. Good to know.
to be more specific, this is the "Sunken Garden" at Butchart Gardens.

does this look familiar???

http://www.redbubble.com/people/pnwnati ... ken-garden

did someone say investment porn??

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Post by stratton » Sun Jun 26, 2011 9:27 pm

Here's the picture from the link.

Image

Paul
...and then Buffy staked Edward. The end.

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Post by Midwest_Investor » Sun Jun 26, 2011 9:39 pm

stratton wrote:
Here's the picture from the link.

Image

Paul
What is AuM?? I think it's "assets under management" in which case the entire study is flawed.

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Post by OkieIndexer » Tue Jun 28, 2011 9:05 pm

stratton wrote:
Here's the picture from the link.

Image

Paul
Only $100k in assets makes one "affluent?" Heck, apparently I was affluent at age 29, despite only making $40k a year at my job!
"In bull markets, people say 'The more risk I take, the greater my return.' But when people aren't afraid of risk, they'll accept risk without being compensated." -Howard Marks, Oaktree Capital

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Post by Midwest_Investor » Wed Jun 29, 2011 9:39 am

OkieIndexer wrote: Only $100k in assets makes one "affluent?" Heck, apparently I was affluent at age 29, despite only making $40k a year at my job!
Yet, if you have $4.9M, then you are only among the "Emerging Wealthy." Odd terminology.

To be honest, I'm not impressed by the entire so-called "report." The Japan numbers just don't feel right to me. Only 9% have less than $100K (household).

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