Ultra-high net worth investors often misread their own portfolios. The 2023 Tiger 21 report shows they hold just 7% in fixed income and 11% in cash, but these small percentages are actually a safety bucket that must come first. Only after eliminating baseline risk can they comfortably allocate 25-30% to private equity and venture capital.
I say I was doing what I thought rich people did. We have a lot of information that's put out about ultra-high net worth and how they're investing. Okay, ultra-high net worth is $30 million plus. So here's a slide from the Tiger 21 asset allocation report from 2023. When I look at this slide 5 or 10 years ago, to me, I go, well, they're investing 30%, the biggest percentage in private equity and venture capital. That must mean it's the most important asset class that they're investing in. So that's exactly what I did. I was deploying capital into angel investments, startups, private equity deals, writing all of these checks. The thing that I failed to realize— this part over here, this, this fixed income, 7%, cash and cash equivalent, 11%— those aren't the smallest percentages because they're the least important. It's that when we look at overall total size, they have filled up their safety bucket first. They've completely eliminated risk, and that is what allows them to invest 25% and 30% in real estate and private equity.
