Hitting the jackpot
There’s a lot of excitement about big lottery jackpots. There were two winners of a $190 million drawing in New Jersey and Virginia. And Georgia, part of a multi-state game, sold tickets to a Powerball pot of $600 million – a new record.
Even those hundreds of millions of dollars pale in comparison to the real jackpot: being a billionaire. These men and women built up businesses and investments that make the Powerball winners look like pikers.
While we can all buy tickets to a lottery and hope to beat the long odds, what is more certain is copying how billionaires invest. We may not create a billion-dollar brand or portfolio but we can learn from their approach.
When you dig deep into the ways of billionaires, you’ll find that they may have focused on a single company. Later they spread their money around. They’re invested into some of the biggest asset classes.
They tend to like most types of real estate. It could be commercial, personal storage or apartment. Some, like Ted Turner, even have hundreds of thousands of acres of raw land.
A few ideas to cover those sectors are Public Storage (NYSE: PSA), Getty Realty (NYSE: GTY) and Vanguard REIT ETF (symbol: VNQ). While none of these is owned by a billionaire, they are a way to play self-storage, commercial and diversified property, respectively.
The Vanguard fund has a current yield of 3.15 percent annually.
Probably the biggest investment of most billionaires is equities. Most of the super-wealthy sold the stock to the public and now we can access their potential growth and innovation.
Some of the “usual suspects” on this short list are Google, Amazon, Disney, Apple and Microsoft. All of these stocks are held by billionaires. Many “billionaire” stocks are held by several of these successful individuals.
It seems like a favorite thing to collect among these wealthy are sports teams. A way to get exposure here is with Manchester United (NYSE: MANU), Madison Square Gardens (Nasdaq: MSG), World Wrestling Entertainment (NYSE: WWE) and Speedway Motorsports (NYSE: TRK).
While Manchester United is play on the worlds’ most popular sport, Madison Square Gardens is a “big league” play, too. They own the New York Knicks and the NY Rangers.
Warren Buffett seems to like preferred stock (a stock that acts like a bond). In the last few years, he’s invested many billions into them. One efficient fund to consider is iShares S&P Preferred Index (symbol: PFF). It has a current yield of 5.73% with a small expense annually of 0.48 percent.
Ross Perot, and others, has also invested heavily into municipal bonds. They usually have good tax breaks, like tax-exempt interest, and historically have low default rates.
The “Bond King” himself, Bill Gross, amassed his fortune managing bonds. The firm he co-founded, PIMCO, manages over $2 trillion! Most is in fixed income. He still manages the PIMCO Total Return Fund. The three top holdings are short-term Treasuries, mortgage bonds and international, developed-country bonds. There’s an ETF version of the fund that trades under the symbol “BOND”.
THE GRAND-DADDY, ONE-STOP INVESTMENT
I know of a lot of investors who love this company. I do, too. It has operations in almost every industry; employs ten of thousands of people; has exposure to real estate, insurance, consumer companies and more. It’s a conglomerate of over 90 different companies and has a multi-billion-dollar portfolio of stocks. If you haven’t guessed it by now, its Berkshire Hathaway (NYSE: BRK-B).
Please take all of these ideas with caution. This is just a sampling of some specific and general investments that the billionaires use. Use this as a starting point to more of your own due diligence. And good luck creating your own winning ticket.