3 facts about typical millionaire portfolios of financial planners

When you buy through our links, Insider may earn an affiliate commission. Learn more.

I want to become a millionaire one day. While I’m nowhere near that, I’m eager to let go of the financial mistakes that take me further from that goal, like spending too much on frivolous items and not having an investment strategy. I also want to understand proven strategies that other people have done. increase your net worth over the years.

Since I don’t personally know many millionaires and a lot of the advice you seek online seems generic, I decided to ask three financial advisors to reveal the secrets behind the financial portfolios of their real-life millionaire clients. Here’s the breakdown each of them shared.

1. Your investments are 70% stocks and 30% bonds

Nick Coleman, a financial planner with Bonfire Financial RIAHe said that when he takes an overview of some of his millionaire clients, he realizes that many of them are at the top or bottom of their careers. That’s why his usual portfolio breakdown looks the way he does.

Coleman says his clients are likely to have about 70% of their investments in stocks and 30% in bonds. When it comes to cash, they are likely to have less than $100,000.

“Most clients want to grow their wealth and prefer to have a high investment allocation and a low cash allocation,” Coleman said.

When it comes to home equity, Coleman said it typically represents less than half of his clients’ net worth. Many prefer not to even count their home as part of their net worth, and instead just focus on assets.

Furthermore, it suggests that clients typically have around 3% of their assets in alternative investments such as gold, digital assets and commodities.

“As a disclaimer, everyone’s situation is very different and requires an expert advisor to understand your situation and goals. [in order] to create and optimize a unique strategy for each client,” said Coleman.

2. Some are heavy on real estate and diversified securities

Cynthia Mayer, a CFA and financial plannerhe sees some of his millionaire clients take a different approach.

The breakdown you gave for a typical millionaire client’s portfolio includes about 35% to 60% of their real estate investmentsand the remaining 40% to 50% in diversified securities portfolios.

“These millionaire clients also typically have $200,000 to $300,000 in cash reserves,” Meyer said. “They have no debt other than mortgages and they don’t spend much on their lifestyle.”

Meyer added that these clients typically save and reinvest 25% to 35% of their net income in retirement accounts or further real estate investments.

3. Many are heavily invested in retirement accounts, with smaller amounts in other portfolios and cash

Andrew Herron, a financial planner and one of the founding partners of Stone Pine Financial, says a typical millionaire client for them has between $1 million and $5 million in net worth, excluding their home equity.

He said most of his millionaire clients have about 70% of their assets in retirement accounts like GO TO, 401(k)sand Roth IRA. Another 25% or so will typically be in different investment accounts, and then they’ll have about 5% in cash reserves.

“Our typical client has 60% to 70% of their retirement and investment accounts diversified in the stock market and 30% to 40% diversified in the bond market and other stable value investments,” he added. Herron.