Building sustainable wealth while mitigating risks has become a top priority for investors. The quest for financial security and growth now demands more than traditional investment approaches; it requires innovative strategies and a deep understanding of evolving financial products. This article brings together the insights and experiences of industry experts and thought leaders who offer valuable perspectives on how to face these challenges. By exploring a range of investment strategies and financial products, they provide practical tips on achieving long-term financial success while effectively managing risk, and ensuring that wealth can be both sustainable and resilient in an uncertain world.
Diversify Across Multiple Asset Classes
Diversify your portfolio. You want to spread your risk across different assets, different deal structures, and different stewards of your wealth. Having 99% of your net worth in the public markets or real estate is extremely risky given those two asset classes are correlated.
Having a little bit of your money in cash, some in a liquid savings/market account, real estate (in addition to your home), collectibles/commodities, and some higher-risk ventures will give you a blended portfolio. The high-risk, high-return assets will give you big wins when they win, but won’t capsize you if they don’t, and vice versa.
Kelly Ann Winget, CEO / Fund Manager / Founder, Alternative Wealth Partners
Adopt a Globally Diversified Portfolio
As a fee-only investment advisor, I believe a globally diversified portfolio of low-cost index funds is one of the best strategies today for wealth-building and risk management. Over the long run, stocks have generated the highest returns, so a majority of the portfolio should be in stock funds. To reduce risk, include bonds, real estate, commodities, and cash. Rebalance regularly to maintain target allocations.
My firm uses Vanguard and Dimensional Fund Advisors, who keep costs low. Studies show high fees are a drag on performance. While passive index funds seem boring, their long-term results are impressive. A dollar invested in the S&P 500 40 years ago would be worth $19 today. Despite many market drops, patience paid off. During the tech bubble and financial crisis, our clients who stayed invested were rewarded.
For most investors, a simple portfolio of 3-4 funds is sufficient. Stick with the plan, ignore market noise and short-term results. Review strategies regularly based on life events, but remain focused on the long game. Generating sustainable wealth is a marathon, not a sprint. With discipline, diversification, and time, the potential power of compounding returns can be achieved.
David Blain, CFA, Chief Executive Officer, BlueSky Wealth Advisors
Invest in High-Demand Sector REITs
I believe investing in REITs focused on high-demand sectors like industrial properties or data centers is a smart choice. These assets are vital for the modern economy—think of the warehouses powering online shopping or the data centers supporting cloud services. They tend to have lower risk because they’re essential, and they usually offer steady dividend income. In my opinion, this blend of stability and growth potential makes them a solid option for building sustainable wealth.
Omër Güven, Co-Founder & CEO, Fintalent
Utilize Robo-Advisors for Efficient Management
As a CPA and software engineer, I believe utilizing robo-advisors for investment management and financial planning is an excellent strategy today for building wealth sustainably while mitigating risks. These digital platforms use algorithms and AI to craft custom portfolios tailored to your financial goals and risk tolerance. They rebalance automatically based on market changes, allowing you to take an efficient, passive approach.
Robo-advisors typically invest in globally diversified ETFs, providing broad market exposure at a low cost. I have recommended robo-advisors like Betterment and Wealthfront to many of my clients. For a 0.25% fee, they can get a personalized investment plan and ongoing account management. During market downturns in 2020, my clients who used robo-advisors saw smaller losses and faster recovery than those who didn’t, showcasing the power of diversification and automated rebalancing. While human advisors provide valuable guidance, robo-advisors are an excellent option if you want to keep fees low and let technology do the work.
For business owners focused on growth, this passive investment approach offers the potential for solid returns over time without constant monitoring or high fees eroding performance. Of course, as with any investment, there are risks, but utilizing technology and keeping a long-term perspective have proven to generate sustainable wealth.
Russell Rosario, Owner, Russell Rosario
Review High-Growth Tech Startups
As an entrepreneur who built a SaaS company from scratch, I believe investing in high-growth tech startups via equity crowdfunding is one of the best strategies today. Platforms like AngelList and SeedInvest provide access to vetted startups with huge growth potential.
My company just raised $2M in funding through one of these platforms, allowing over 200 investors to own equity for as little as $500. These investors will benefit from any future increase in our valuation. Startups that make it big can generate 10x, 100x, or even 1000x returns for early investors.
While risky, equity in tech startups has the potential for life-changing wealth. I invested $10K in a friend’s startup 3 years ago, and it’s now worth over $500K. For smaller amounts, the risks are more tolerable, but the potential upside is huge. The key is diversifying across startups and only investing what you can afford to lose.
For investors seeking income, real-estate lending platforms offer 8-12% yields secured by properties. My company uses these to generate extra income from excess cash. The risks are lower, but the returns are a bit lower too. A balanced portfolio with both high-growth startups and stable real estate can generate sustainable wealth over the long run.
Chase Mckee, Founder & CEO, Rocket Alumni Solutions
Consider Fixed-Indexed Annuities for Stability
As CEO of an insurance and financial-services company, I believe fixed-indexed annuities are an ideal vehicle for generating retirement income while mitigating risk. These products provide guaranteed rates of return in the 3-5% range along with limited market exposure that can boost returns, commonly capping the upside at 10-15% annually. The principal is never at risk of loss, which provides stability.
For example, we placed a portion of a client’s IRA into an index-linked annuity last year that returned 13.5% due to its linkage to the S&P 500, far outpacing money market or CD rates. However, had the market declined, their principal would have remained intact. Annuity income can also be guaranteed for life, ensuring retirees never outlive their money.
While annuities are complex products, when used properly they are powerful tools for generating predictable income and growth. I often recommend allocating a portion of one’s portfolio, around 30-50%, to these vehicles to balance risk in a retirement income strategy. The key is working with fiduciary advisors who understand how to incorporate annuities into a comprehensive financial plan customized to each client’s needs and risk tolerance.
Ben Klesinger, Co-Founder & CEO, Reliant Insurance Group
Implement Dollar-Cost Averaging Strategy
As the CEO of a tech company, I have a close look at today’s volatile market. I believe Dollar-Cost Averaging (DCA) serves as a wise investment strategy. DCA involves regularly investing a fixed amount of funds into a specific asset, regardless of its price. It mitigates the risks linked to market timing.
As we regularly invest, we purchase more assets when prices are low and fewer when prices are high, leading to potentially higher long-term returns. It’s a disciplined and straightforward approach that suits today’s complex market.
Abid Salahi, Co-founder & CEO, FinlyWealth
Explore Real Estate Crowdfunding Opportunities
Real estate crowdfunding is an emerging investment opportunity with significant potential. Platforms like Fundrise and Yieldstreet provide access to institutional-quality real estate deals with targeted returns of 8-12% annually. My law firm has used them to generate income and appreciation for clients.
For high-net-worth individuals, real estate syndications offer 12-20% returns investing in larger commercial properties alongside experienced sponsors. The key is finding sponsors with a proven track record to properly structure the deals. While less liquid, the cash flow and tax benefits can build wealth sustainably over time.
David Fritch, Attorney, Fritch Law Office
Mix Low-Cost Index Funds and Dividend Stocks
A good way to build wealth and manage risks is by using a mix of low-cost index funds and dividend stocks. Index funds spread your money across many companies, reducing risk. Dividend stocks pay you regular income and can help protect against market drops.
From my experience, balancing these types of investments has worked well. For example, in managing investments for my travel business, this mix helped me handle market ups and downs while steadily growing my money. It’s a smart way to stay stable and keep growing your wealth over time.
Swena Kalra, Chief Marketing Officer, Scott & Yanling Media Inc.
Leverage Rental Properties for Cash Flow
Rental properties offer a unique combination of stability, cash flow, and appreciation potential that other investments may not provide. The primary advantage of owning a rental property is its ability to generate steady cash flow. Unlike stocks or mutual funds, which can be volatile and unpredictable, rental income provides a consistent stream of monthly income that can be used for expenses or reinvested. Moreover, rental properties are less affected by market fluctuations compared to other investments. Even during economic downturns or stock market crashes, people still need a place to live and will continue paying rent. This creates a reliable source of income that can help investors weather financial storms.
In addition to cash flow, rental properties also have the potential for long-term appreciation. Real estate values tend to increase over time, making it a wise investment choice for building sustainable wealth. As the property appreciates in value, investors can either sell it for a profit or continue renting it out for passive income.
Erica Nunley, Founder & CEO, Nunley Home Buyers
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Alignment with the UN SDGs
The article aligns well with several UN Sustainable Development Goals (SDGs). Here’s how it connects:
- Goal 1: No Poverty – By promoting sustainable wealth-building strategies, the article supports efforts to reduce poverty. Ensuring individuals can manage their finances effectively helps create financial stability and resilience against economic shocks.
- Goal 8: Decent Work and Economic Growth – The focus on innovative investment strategies and financial products encourages economic growth and the creation of jobs. By advocating for diversified portfolios and investments in high-demand sectors, the article fosters economic activity and stability.
- Goal 9: Industry, Innovation, and Infrastructure – Investing in high-growth tech startups and real estate crowdfunding highlights the importance of innovation in driving sustainable economic growth. This supports the development of robust infrastructure and technological advancement.
- Goal 12: Responsible Consumption and Production – The emphasis on diversified investment approaches encourages responsible financial practices, advocating for mindful consumption of financial resources. This aligns with promoting sustainable practices in investment management.
- Goal 17: Partnerships for the Goals – The article showcases collaboration among industry experts and thought leaders, demonstrating the importance of partnerships in sharing knowledge and strategies for sustainable wealth creation. This collaborative approach is crucial for achieving the SDGs.
Overall, the article presents a comprehensive look at financial strategies that not only aim for individual wealth but also contribute to broader economic and social goals, promoting sustainability and resilience in financial practices.
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I hope I can use these tips someday!
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