Today, the term\nmillionaire has been replaced by a new term – high-net-worth individuals\n(HWNIs). An HNWI is a person who has a minimum of $1 million in liquid assets.\nLiquid assets only refer to money held in banks or brokerage accounts and\nexclude assets like collectibles, durable goods, and primary residence. This\ncategory of wealthy individuals can be further distinguished into three\nclassifications \u2013 high-net-worth individuals (HNWIs) with an asset balance\nbetween $1 million and $5 million, Very-high-net-worth individuals (VHNWIs)\nwith an asset balance between $5 million and $30 million, and\nultra-high-net-worth individuals (UHNWIs) with an asset balance of more than\n$30 million in liquid assets.<\/p>\n\n\n\n
According to a\nrecent study, in 2020, more than 11.6 million American households had a net worth\nbetween $1 million and $5 million. This figure was 5.5% higher than the\nprevious year. The same study reported that UHNWIs in America grew by 21.3% to\na total of 1.8 million households. Even though the number of HNWIs and UNHWIs\nare rising in America, there is still a large population that is below this\nthreshold. Achieving the level of an HNWI is advisable for people who want to\nlive a financially secure retirement. Financial experts recommend that an\naverage retiree should have at least $1 million as retirement savings to live a\ncomfortable life ahead.<\/p>\n\n\n\n
However, while everyone dreams of becoming an HNWI, the journey to reach the milestone requires an effective strategy with the right investments. It is important to understand high and ultra-high-net-worth asset allocation and assess what type of investments you can make to achieve the target financial milestone. For example, while you may think that HNWIs and UHNWIs have access to wider investment opportunities than an average investor, such as expensive paintings, vintage cars, equity in private companies, expensive wine, real estate, and more, as the data suggests, the asset allocation for high-net-worth individuals\u2019 lays 26% in alternative investments, a class of asset accessible and available even for an average investor. However, according to a recent survey, alternative assets only form 5% of the average investor\u2019s portfolio. Therefore, as an investor, you may consider decoding a high-net-worth individual\u2019s asset allocation and aim to create a portfolio that closely mimics theirs, while still aligning with your risk tolerance and financial goals. To do so, you can also consult with a professional financial advisor<\/strong><\/a> who can guide you on the same.<\/p>\n\n\n\n Here is an in-depth breakdown of an HNWIs asset allocation:<\/strong><\/p>\n\n\n\n Table of Contents<\/p>\n