In 2016, according to PwC, the wealth of billionaires grew by 17 percent. If you aspire to be a billionaire, it pays to think and act like a billionaire.
Here are five ways to follow their footsteps and make your investing moves the way billionaires do.
Focus on innovation-driven companies
Billionaires worldwide are investing in companies driven by innovation, that raise the standard of living and create new jobs. Billionaires running industrial enterprises worldwide employ about 3 million people. But billionaire-run technology companies are catching up fast with more than 2.7 million employees.
However, billionaires do not consider tech money as fast money, as some might assume. Very few of them have built or invested in unicorn startups worth over $1 billion. Out of the newest group of global billionaires, just eight have founded their present businesses in the last 10 years.
Billionaires like to work with groups of like-minded individuals when it comes to investment, business, and philanthropy. This trend is growing rapidly. For instance, Warren Buffett and Jorge P. Lemann (Brazil’s biggest billionaire) have joined to buy doughnut store chain Tim Horton’s as well as food giant Kraft Heinz.
“The Giving Pledge,” the Buffett-led campaign to ask the world’s richest to give away most of their wealth in life, has 160 of the world’s prominent billionaires and families that are committed to philanthropy. Analysts say that these ultra-rich individuals leverage their networks and focus not just on wealth creation but also on making a positive social impact.
Invest where your heart is
Out of the world’s top 200 art collectors, 72 are billionaires. Over 140 of the world’s leading sports franchises are owned by billionaires. This includes more than half of the English Premier League and two thirds of the NBA.
According to John Matthews, UBS Wealth Management Americas’ head of private wealth management, billionaires invest in their cultural passions, whether it is in arts, sports, or other arenas. With these pursuits they are making an impact on their communities as well as the world, apart from generating strong returns on their investments.
Stay calm when the markets are volatile
Warren Buffett advised people amid violent market fluctuations in 2016 to not watch the markets that closely. Invest in good companies, have stellar management, and solid fundamentals for a long period of time, he said, and do not go by speculation or temporary market trends.
Bridgewater Associates’ founder Ray Dalio, whose net worth is $15 billion, agrees with Buffett. During an address at the Harvard Kennedy School, he said that you should sell when you are confident, and you should buy when you are scared. Both Dalio and Buffett say that the right way to invest successfully is not to anticipate daily market fluctuations and keep a level head despite them.
Engage in wise estate planning
Over the next two decades, billionaires in the 70+ age group could transfer $2.4 trillion to their heirs and charities. Billionaires recognize that succession planning is getting more complex due to stringent tax codes and increased regulation.
It is wise to look ahead and create a solid estate plan for wealth transfer and utilize it for the growth of the next generation even if you are not a billionaire.
It is also wise to look at your children – are they ready to be worth that much money? Should be they be given that much money? Or should most of your worth be given to charity?