Are Mutual Funds for the Poor?

Are Mutual Funds for the PoorThe Wealth Report, a WSJ blog written by Robert Frank, recently posted an interesting article entitled How the Rich Invest. The upshot of the article is that the rich don’t invest in mutual funds or ETFs. A survey conducted by Prince & Associates, Inc. found that for those investing more than $20 million, not one had invested in mutual funds. Rather, they had invested in start-ups and hedge funds:

My first reaction was that those with $20 million or more made their money from running their own business, but that would explain only some of the results. Frankly, I think something must be missing here. I’ve searched for the survey, but can’t find it. If you can, let us know. But the survey as described on The Wealth Report does highlight at least two important concepts.

First, mutual funds are for the poor (and the rich, too). My first investment outside my 401(k) was $100 in a mutual fund. I automatically invested $100 each month. That’s one of the great things about mutual funds–you don’t have to be rich to invest in them.

Second, as investments grow, particularly in taxable accounts, many investors do tend to look for opportunities outside of mutual funds. Some look to real estate, others, according to the survey, look to hedge funds and start-ups.

I’m not convinced that these other investment opportunities necessarily result in better returns, although they do add another level of diversification, which is one reason I started investing (slowly) in residential real estate. Regardless, all of these investment vehicles can, if used appropriately, help build lasting wealth.

So, if you’re worth at least $20 million, what do you invest in?

Published or Updated: July 13, 2015
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Speak Your Mind


Advertising Disclosure: The credit card and savings account offers that appear on this site are from companies from which receives compensation. This compensation may impact how and where products appear on this site, including, for example, the order in which they appear on category pages. does not include all credit card companies, banks, or all available offers, although best efforts are made to include a comprehensive list of offers regardless of compensation.