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Are Best Investments Reserved for the Rich?

rich investments

When we think of buying things, it’s easy to believe that spending more gives us better quality.

If you buy an expensive Audi or BMW, it’s likely to be a much better car than Dacia or Peugeot. This idea applies to many things – food, houses, clothes…

But strangely, it doesn’t work in the world of investing.

The Myth in High-End Investing

Many rich people think that with more money, they can get better investment returns. This belief has created a huge market for exclusive investments like hedge funds, private equity and venture capital.

These options seem attractive and come with a lot of prestige … but usually don’t perform as well as simpler, more accessible investments.

The big problem rich investors face are high fees that significantly erode their long term returns.

Let’s take hedge funds for example.

Hedge funds are specialized investment funds that use a range of strategies, like leveraging and short-selling, to maximize returns and manage risk. They are typically open to a limited range of accredited rich investors.

A report by HFR (Hedge Fund Research) showed that in the last decade, the average hedge fund returned just 3.4% per year, significantly underperforming the S&P 500, which had an annual average return of 13.6% during the same period.

Investing €100,000 for 10 years and getting 3.4% annual return in an average hedge fund would amount to €139,703 at the end of this period.

Let’s compare this to index funds. Index funds are investment funds or baskets of stocks that aim to track the performance of a specific market index, like the S&P 500. They are known for their low fees and simplicity. Members of my MMMM investing program are investing in index funds.

Investing the same amount in a simple index fund that produced 13.6% annual gain would amount to €357,918.

In simpler terms: if you have invested €100,000 in an average hedge fund over the last decade you lost more than €200,000!

So much for maximizing returns 🙂

The same goes for private equity and other similar options. A study by Bain & Company found that, over a 10-year period, private equity funds only marginally outperformed public stock markets, and this was before fees were taken into account. When you accounted for the high fees they are charging, they performed worse than index funds!

The Strange Investing Reality

The fact is, that if you are investing in simple index funds and some big crypto projects, you will almost certainly outperform even the richest people in the world when it comes to investing returns.

More money doesn’t guarantee better investments. This is one of the most important investing lessons I learned in my career.

That is why in my investing programs we are sticking to investment options that come with the lowest possible fees and have the best potential for great long-term returns.

Special invitation

I’m Robert Rolih, the international bestselling author of ‘The Million Dollar Decision,’ which has been translated into multiple languages. I’ve been featured on Bloomberg TV, Business Insider, Newsmax TV, and in over 50 other media outlets. Notably, one of my investing quotes was acclaimed as the best in the world by Yahoo Finance.

Over the last decade members of my flagship long-term investment program have vastly outperformed even the best Wall Street professionals.

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