Ep 243 - How the Top 1% Invest Differently than the Middle Class

Hey everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And welcome to another episode of our.

Podcast which is called Freedom through Passive Income.

That's right, and welcome to another episode. And this episode is entitled how the top 1% invest differently than Than the Middle Class.

Yeah, I like this episode because we're all chasing like the wisdom behind investing wisely. Wisdom wisely. I just kind of tooled that together. So we're always chasing the. I'm reading articles all the time about the 1% and I'm paying for people who are teaching me about the 1%. I'm paying people to teach us about the 1% of the 1%. Like I'm constantly going, how do I get smarter about where I'm putting my money? And I know the growth of capital is equally as important as the preservation of capital. Right. So I'm just do endless and endless amounts of research on this. So I thought that this topic is important. It's going to lead into a six series episode about personality types. So I'm going to give you three rules in this about the top 1%, the three main things. And really it's four. So let's just say it's four. There's four things that they.

Three things, but it's four.

Because there was a point that I was going to add and I was like, man, that should actually be step four. So the very first thing that you want to focus on when you're investing, if you want to invest like the top 1%, it's alternative investments. Now a lot of people will see that word and me included, and I didn't know what that meant. I was like, what do you mean? Like, I wasn't really familiar with investing in general anyway. Right. When I was, I understood real estate investing, I didn't know real estate investing was an alternative investment.

Right.

I thought everything else was alternative, like stocks and crypto. Like real estate is the way everybody invests. Right. Because that's in you see all the time, that's where most millionaires are made. And when you look at billionaire portfolios, you see that they're all invested in real estate. So I thought that was the most common. Turns out stocks and bonds are the most common and pretty much everything else is an alternative investment. So real estate is an alternative investment. Crypto is an alternative investment. ATMs, venture capital, all of those things, short term rentals, that's kind of in the, in the real estate bucket. But like, there's a long list of different things that you could be investing in. It's considered alternative investment. So that is, number one is they don't invest all of their money in stocks and bonds, which a majority of Americans do, because that's where their retirement accounts are. Right. And it's what they. They hear about the most. And so. And then, number two, they rely on research, either done by themselves or done by their multimillionaires. Billionaires have family offices. Family office is something we did a episode on and what it was, and they have this entire team of people that actually do all the research for them. But what we did is we actually did an episode on getting comfortable on being comfortable. Right, right. I don't remember the title of that episode, but it was an episode telling people, and I'll let you share kind of a recap about this about telling people. Don't let people tell you what to invest in or give you the fomo. So talk a little bit about. Give a small recap of that episode.

I have no idea what episode you're talking about. No, no, it's because honestly, we're on episode like 40 or something like that. Remember that one? But no, it's being comfortable in investing and you doing your own research, whether it's or it's lengthy research, you need to be comfortable in your own skin and being able to do, because you're the one that's taking the risk of the investment. So you have to be comfortable with that. You have to make sure that somebody can't say, hey, you need to invest in crypto and you need to do it because of this. I'm not going to invest in crypto because somebody tells me that way, especially not that way. So not until I've done the research and have done looked into it and made sure that I'm comfortable with it, because if I'm not comfortable with it, there's no way I'm sending my money out there.

Yeah, that's right. Exactly. You did a good job of recapping the episode without actually knowing which episode you have to recap. So I remember the episode. I don't remember the title either. So hopefully, AJ do some research for us and put these links up here. The 40, 40, 20 episode is something we're going to want to link to during this one. And that's when we talk about rule number four, the one about FOMO that we can link to when it talks about here, doing your research, not getting scared into investing in something that you shouldn't, and then the one about being comfortable. And if you have A hard time, AJ Finding that episode to link it for everybody. Let me know and I'll help you find it. But good job, Flip. Okay, so that's number two. Doing your research as much as you can. Having other people do your research, if you the capabilities to do that, or just being, quite frankly, comfortable, meaning you don't have to do all the research. You have to know the team. You have to understand their experience. You have to go in and ask the questions that matter to you to feel comfortable enough to place your money into something. And then rule number three is knowing your personality type. This is something that actually, this is what we're rolling into for a series of six different episodes to dive further, because very recently, and AJ you can link to that one, we did start talking about personality types and how important that they are of knowing your personality when you're investing. We're going to dive really, really deep. Because I thought, you know, I study personalities all the time and how to work with people, talk to people, things like that. And I thought, you know, I read an article and it had four different personality types. And I said, why don't I find that article? And actually, let's just dive deep because it matters in investing who you are and how you invest, and a lot of people don't have time to study what you want to study. So we're going to do that for the next series. So that's rule number three is knowing your personality type, and we're going to dive deep into that. Number four, which I didn't really put down, was the diversification. So knowing, diversifying across. So the 1%, they're not invested in just stocks and bonds. They don't have a mutual fund that's invested in like, you know, you know, eight different things. And calling it diversified. Right. They don't have one multifamily property. And saying they are diversified by doors. All of that being true. A mutual fund is diversified. A large apartment building that has multiple doors is diversified within itself. So all of those are true, but the top 1%, they're diversified across so many different asset classes that they or their financial teams feel very comfortable with. And this is where I think, AJ I was going to tell you to link to the 40, 40, 20 that we did. Dan Fleischman. Yep, yep. So he talked about 40% of your bucket should be invested x 40% of your bucket here in x and then 20% x. And it was the risk profile of, you know, a very safe, not as safe, but pretty Safe. And then 20% kind of shot at glory, because like everybody, preservation of capital is very, very important. So he put 80% of his money into those categories of super safe versus medium safe, but higher growth. And he only takes 20% of his money to go, you know, into venture capital or very high risk investments where he knows he just might lose it. What Flip and I call burning money.

Burning your money.

Exactly. So those are the types of things that the 1% are actively doing. It's stuff that you and I have talked about many, many times. We just thought doing an episode with the four rules would help everybody. So what else do you want to add here?

It's just, again, it goes back to your personality type, and you also touched on it too, how much risk you want to take, whether it's because I remember, gosh, this was eons ago when I actually had a 401k with a company that lasted for like two or three years or whatever. And they ask you in the 401k, you know, how risky do you want to be? Do you want to be like, mild, medium, or hot? It's like the salsa. It's like your choice of salsas, you know? And back then I was just like, mild, mild. Don't burn my money. Yeah.

Even though you were young. Right. And had the appropriate personality and risk profile. Not even personality. You had the risk profile that most people would say you could be aggressive because you could lose your money.

Right.

But your personality type.

Yeah. Back then I was just like, don't. Don't burn my money. Yeah, that's my money.

Yeah, exactly. Right. Yeah. And I would say I talk to, you know, people regularly that, that they're like, oh, my gosh, Stockmar, I lost so much money. And. And I just think, you know what, you just haven't been educated and you didn't realize how to put into the different buckets and appropriate percentage where you. You didn't have that fear or that reaction of panic when you saw the stock market. Because those of us who have done the research, which we were not in this position years ago, but now that we have, we don't have that reaction anymore. Right. For you, it's kind of funny when you're looking at your phone and you're like, look how much I lost or look how much I gained. It's more of a game, a little bit. And money should be a game, right? It should be a money movement thing that you're going to. Here, here, pop it over here. Let's have. And it just gets fun. Right? Because you took the time to make some wise decisions. So for those of you listening, it's hard to take away four points, right? If you're watching, you probably have the opportunity to write it down. So I'm going to say them real quick again at the end of the episode so we can close it out. Number one is investing in alternative investments. So top 1%, what do they do differently than middle class? They invest in alternative investments. That's number one. Number two, they do their research and or get comfortable with other whatever investment that they are investing in. Number three, they match opportunities with their personality type. Number four is they diversify. Not in one pool of assets across many, many different assets. So those are the top four things that 1 percenters do and we're all, you know, trying to achieve to be as, you know, as, as wise as we can in our investment. So hopefully this helps you do a better job.

That's awesome. Well, I can't wait to get into all these. Yeah, this is awesome. Well, we hope that you enjoyed this episode. Make sure you head on over to our website, freedomcapitalinvestments.com and Jo, join our investor club. Make sure you're checking us out on all the other social medias as well. But we like to end all our episodes with invest Smart, Live happy. Bye everybody. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on the show are not guaranteed. All investment strategies have the potential for profit and loss.

Sam.