Where and how do the super wealthy invest?

[ncbill]

Stormy Kromer, you know the feel of being part of that land and how rewarding working the land is. Land in most cases will cost you money, just like any other purchase you make (home, car, business) etc.

I have told a story before here that in the very early 80's didn't have much but had a job. I bought an irrigated farm. I was turned down by one bank, but I finally got the money. I rented it out and worked a small part of it myself. I owned it for 25 years and sold it for 14 times more than I had paid for it including the financing. I had it paid for many years before I sold it though.

I stuck my neck out as far as it could go, and it was a very rewarding time in my life owning that dirt. I get depressed when I think about that I sold it.

Farmland can also come with significant tax advantages.

Here in my state you get classified as a working farm if you generate $1,000/year in revenue (not profit) from the farm.

Which means you only pay property tax on the personal residence (and the land on which it sits) on the farm...no tax on everything else, e.g. farm buildings/equipment, land.

A friend has the use of ~60 acres that way...most undeveloped woods, creeks, gently rolling hills...we joke he has his own private park.

 

[street]

ncbill, oh yes, tax advantages from every expense you have are a big deal. I forgot to mention that is another reason dirt is a good investment.

 

[aja8888]

It seems to me that one of the best return on investments for some of the ultra wealthy is strategically placed campaign contributions.

You mean the ones made after the campaign/election is over?

 

[aja8888]

Farmland can also come with significant tax advantages.

Here in my state you get classified as a working farm if you generate $1,000/year in revenue (not profit) from the farm.

Which means you only pay property tax on the personal residence (and the land on which it sits) on the farm...no tax on everything else, e.g. farm buildings/equipment, land.

A friend has the use of ~60 acres that way...most undeveloped woods, creeks, gently rolling hills...we joke he has his own private park.

A friend of mine has 175 acres halfway between Dallas and Houston. He told me his taxes are $700/year. He has some cows and a few chickens.

 

[yakers]

Only one exposure to the investments of a seriously rich family, one of the worlds richest families over the last 200 years,many years ago my friend in London was one of four who just traded commodities and that was not a major part of the family portfolio. They bought stocks and bonds from all over the world, no home bias,where is home to an international family anyway? They bought companies, they bought land, they were a Lloyds 'name'. Owned many antiques and artworks. Absolutely nothing I learned that applied to my investments but facinating.

 

[luckydude]

Well said. I just moved back to my family farm that my grandpa bought in 1926. 240 acres of good black dirt. It took my lifetime to pay for it and now it provides about half my living expense. It feels good to be on the land, I can't explain it but I think some here would understand. It's 10 below zero this morning and I'm looking out at where I'm going to plant a new orchard and til a new garden.

It's a special feeling to stand in the middle of a big spread that you own, look around and know that all that land is yours and you can do with it however you please (legally of course). You feel a connection with the land and the sense of freedom and solitude is wonderful. I just love that feeling every time I go to check out one of my parcels.

 

[pb4uski]

I owned a small business and eventually sold it. Started it from dirt, ran it for 24 years. When I finally sold, about 20% of my wealth was equity in the business. Another 20% was equity in the building that it was housed in that was owned separately in an LLC I had and the other 60% was from saving and investing until I retired in 2020 at 57.

That's actually unusually good... usually the equity of the business is a much higher than 40% of a retiring small business owners net worth in my experience based on a half dozen or so small business owners that I know.