How do wealthy families divide their investments?
Short answer: Richard C. Wilson says the right balance depends on where a family built its expertise. He describes founders stepping in as chairman or CEO in a niche they know, while public holdings stay hands off.
At a Family Office Club event, Richard C. Wilson presents his framework for how families organize wealth and invest.
Diversified public investments
Richard says most families he works with want some exposure to diversified public markets. He says they may ask their wealth advisor to avoid certain industries or favor income. (at 4:16)
Cash flowing real estate
Richard says the second bucket is conservative cash flowing real estate or private equity. He says many families he works with put 5 to 20% into real estate development, which may carry more risk and potentially offer better returns. (at 4:44)
A focused business niche
Richard says families play offense in the area they know best. He says they might put 5 or 10% of free cash flow back into that niche, where they can grow their balance sheet fastest. (at 7:02)
"So, they keep very low debt, very low credit. So, when they need to, they could tap into that."
From Richard's exclusive Billionaires.com interviews
Lessons from Richard C. Wilson's one-on-one interviews, as published on each interview page.
- Michael Lee-Chin: Invest in what people will do next. He saw that his generation would shift from consuming to saving and investing. He chose wealth management companies over banks and insurers to avoid underwriting losses.
- Tom Rosen: Buy when the market is down. Tom bought a lot when the stock market almost collapsed and made a substantial profit. In the year that followed, oil and gas surged. So did some tech.
- Tim Draper: Teach children about money early. Give them a small allowance and have them earn and invest money in the stock market. Over time they learn to ask sharp questions about how a business works.
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Frequently asked questions
How do wealthy families divide their investments?
Richard C. Wilson says the right balance depends on where a family built its expertise. He describes founders stepping in as chairman or CEO in a niche they know, while public holdings stay hands off.
How much debt do families use on properties?
Richard says the families he works with average about 20 to 40% debt on properties. He says some may reach 50% loan to value, and most do not use 70 or 80% debt.
What kind of returns do these families seek?
Richard says many families he works with have already hit their home runs. He describes them as looking for doubles with people they trust, with a triple sometimes happening.
Sources
Quotes are copied from the video captions and checked against the transcript. Timestamps link to the moment in the video. General information only, not legal, tax or investment advice.