People who have high-incomes, or for that matter wealth, aren’t a monolithic group.
They don’t all look like the people in the image above
In general, wealthy people aren’t looking to beat the market, and are more looking for the preservation of capital.
Think about it this way. Somebody who has started up a company and sold it on, or for that matter is just taking a great dividend every year, has already beaten the market.
In many cases, beat the market by a huge amount, by:
1.Taking many calculated risks
2.Working really hard and/or smart
3.Keeping to what they know, usually in a specific industry
4.Having wealth concentrated and linked to a specific company, rather than a diversified portfolio.
5.Being in the right place, at the right time, coupled with some of the points above like taking calculated risks. This is especially the case for people who have got into a new industry, like the internet in the 1990s.
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Therefore, once the fast-growing stage of the company has come and gone, the founder is looking for the opposite of this.
In other words, diversification, preservation, less time and effort by outsourcing to an advisor, and so on.
The same is true for people who got wealthy by investing. The majority simply invested from a very young age and compounded.
But one day, typically closer to retirement, those kinds of people want to take some risk off the table and have a more diversified portfolio.
The point is, investing to want to become rich, is very different from investing if you are already wealthy.
