How do the wealthiest investors protect their assets?

Author of the entry: Mennica Skarbowa
Date of entry: June 24, 2023

Does being a billionaire mean having an unimaginable amount of money? If we mean money in the sense of cash or bank account balance, then definitely not. According to experts from the Visual Capitalist website, the average billionaire holds only 1% of their net worth in cash. The rest is invested, with gold playing an increasingly important role in recent years. Why do the wealthiest investors choose to invest in gold?

1. PROTECTION OF ASSETS IN THE EVENT OF A CRISIS

Who?

Jacob Rothschild – banker, investor, and member of the world's most famous banking family

Net worth: $5 billion

What is he afraid of?

Rothschild believes that the current monetary policy of central banks is the largest experiment of its kind in world history. Therefore, investors should focus on protecting their assets from its effects.

What is he doing?

In 2016, as CEO of the investment fund RIT Capital Partners, Rothschild decided to increase the amount of gold and other precious metals to 8% of the company's total portfolio.

2. MAINTAINING THE PURCHASING POWER OF CAPITAL

Who?

David Einhorn – founder and CEO of Greenlight Capital hedge fund

Net worth: $1.53 billion

What is he afraid of?

According to Einhorn, the Trump administration's policy focuses on artificially stimulating economic growth, which will result in massive inflation.

What is he doing?

To protect his assets, since 2017 Einhorn has been reducing his investments in securities in favor of purchasing assets that are not highly correlated with financial markets, including mainly gold.

3. DIVERSIFICATION OF THE INVESTMENT PORTFOLIO

Who?

Ray Dalio - founder of Bridgewater Associates, the world's largest hedge fund

Net worth: $16.8 billion

What is he afraid of?

Dalio constantly emphasizes that continuous money printing cannot be a way to deal with growing public debt, as is currently the case in the US, for example. The billionaire is convinced that this situation poses a serious risk of collapse and that gold should therefore constitute 5-10% of every sensible investor's portfolio.

What is he doing?

Dalio became famous for saying: If you don't hoard gold, you don't know history or economics. It should therefore come as no surprise that Bridgewater increased its gold reserves by 525% in 2017.

* The value of assets minus the sum of liabilities (loans, debts, penalties, taxes due and unpaid, etc.)

** Based on: "How Billionaire Investors Are Protecting Their Wealth" and "Why the World’s Billionaire Investors Buy Precious Metals," www.VisualCapitalist.com