In this guide
Have you ever wondered how the rich invest? Cautiously is the answer.
Investment Trends recently conducted research on this question for the financial advisory group, LGT Wealth Management’s 2025 State of Wealth Report. Australia’s so-called high-net-worth (HNW) population (defined as those with more than $1 million in investable assets (excluding the family home)) grew 10% to 760,000 people in the year to June 2025.
Along with their greater numbers, the rich are also getting richer. Surging asset prices lifted total investable assets by 18% to a record $4 trillion. This translates to an average wealth of $5.6 million per investor, and $18.9 million for ultra-high-net-worth individuals with more than $10 million to invest. So there’s a lot at stake.
Investment Trends surveyed almost 1,200 HNW Australians, including 168 of the ultra-wealthy.
The results are instructive, even if you’re not in the millionaires’ club.
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Diversification, caution and patience
It’s often assumed that wealthy people became so because they are good at investing and willing to take risks in pursuit of high returns. But the reality is more nuanced, especially where the psychology of investor behaviour is concerned. More on that later.
Against a backdrop of Donald Trump’s April 2025 tariff turmoil and rising economic and geopolitical uncertainty, wealthy investors kept their cool. The report found HNW investors remained disciplined, with two-thirds making no major adjustments (defined as portfolio changes of 10% or less) and substantial portfolio changes at a decade low.
LGT Wealth chief executive Michael Chisholm said staying the course takes discipline and perspective. “(Wealthy investors) are thinking more like global institutions – measured, diversified, and focused on long-term goals.”
One of the most interesting findings was a growing appetite for investments in private markets, as wealthy investors seek to diversify growing risks. Even so, shares and property still reign supreme.
Table 1: Where the rich invest (as a proportion of total assets invested)
| 2024 | 2025 | |
|---|---|---|
| Direct Australian shares | 30%* | 29% |
| Direct international shares | 6% | |
| Managed funds | 5% | 4% |
| ETFs | 5% | 7% |
| LICs | 3% | 3% |
| Property | 29% | 25% |
| REITs | 4% | 2% |
| Term deposits/high-yielding savings accounts | 13% | 7% |
| Fixed income | 3% | 3% |
| Private markets | 3% | 7% |
| Cryptocurrency | <1% | 1% |
| Other alternatives | 3% | 3% |
| All other investments | 3% | 3% |
*Direct Australian and international shares combined before 2025. Source: Investment Trends.
A growing appetite for private markets
As you can see in the table above, direct Australian shares are still the ballast in the portfolios of wealthy investors, at 29% of total assets. The ultra-wealthy hold slightly less at 22%. This may be partly explained by their higher exposure to international shares, 8% compared with 6% for high net wealth investors overall.
Wealthy Australians’ love affair with direct property also remains intact, despite a dip in 2025 from 29% to 25% of total assets invested. When asked about their investment intentions for the next 12 months, wealthy investors seeking growth ranked property third after Australian shares and ETFs.
ETFs appear to be gaining ground among wealthy investors overall at the expense of managed funds. In this, the rich are not so different from the rest of us.
Cryptocurrency is also popular among growth-oriented investors.
The big story though, is the rising popularity of alternative assets, and private markets in particular. Private markets include private equity, private credit and infrastructure.
Allocations to alternatives, including private markets, grew from 6% to 10% over the year. For the ultra-wealthy, allocations tripled from the previous year to 17%. Within that, exposure to private markets more than doubled to 7%, likely due to the expectation of higher returns than those on offer from public markets as well as diversification benefits.
Diversification was also a key driver for private infrastructure investments.
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The report found the growth in appetite for private credit solutions is especially strong, “likely driven by the desire to generate healthy income flows as interest rates trend down”. While the total sums invested in private equity are larger, expected inflows to private credit are likely to exceed those for private equity over the next 12 months.
The importance of advice
While ETFs and other managed investments are making it easier to diversify into private markets and other alternative asset classes, it’s a new area for most investors, so professional advice is recommended.
As the report notes, the Australian Securities and Investments Commission (ASIC) cracked down on the private credit sector in the latter half of 2025 due to concerns over liquidity and transparency, and several high-profile fund failures. “The role of advisers in helping clients navigate the landscape of this growing sector is likely to increase in importance, as a flight to higher quality private credit assets unfolds.”
While the number of wealthy investors using professional advisers is increasing, it’s somewhat surprising that only 26% do so. Yet 58% report unmet advice needs, with advice on inheritance, estate planning, tax strategy and retirement planning all flagged as areas of need.
Aligning investments with values
Far from the stereotype of the rich as being driven by greed, the State of Wealth Report revealed high levels of values-driven investing.
In 2025, 30% of wealthy investors reported holding sustainable investments, with portfolios averaging 35% aligned to these investments. A further 9% planned to get with the trend in the coming year.
Interestingly, wealthy women are leading the way, with 37% investing on ethical or ESG (environment, social and governance) grounds compared with 29% of wealthy men. Women also allocate a higher proportion of their portfolios to sustainable investments, at 40% compared with 34% of men.
But values have their limits. “Investors expect market-level returns at a minimum – that’s non-negotiable. Environment or social outcomes are an additional benefit, not an alternative to performance,” says Chisholm.
The millionaire next door
It’s human nature to be curious about how the other half lives or, in this case, how the rich invest. It’s also generally accepted that the same golden rules of investment apply to everyone – diversify, understand the trade-off between risk and return, have a plan, be patient and hold your course when markets are volatile.
But do they?
Dr Suk Lee, a financial economist at the University of New South Wales (UNSW), was part of a team researching the social and psychological aspects behind investment decisions. Their 2025 study, in the Journal of Financial Economics, found that investors systematically choose different types of risk depending on how close or distant their aspirations were.
The further people’s goals were from their current situation, the more they moved from ‘safe but steady’ strategies towards ‘long-shot lottery’ approaches.
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Keeping up with the Joneses
For example, a millionaire living and working among people who have luxury cars and boats like their own is likely to feel their financial goals have been met or are within reach. So it’s rational to take a cautious approach to investing, choosing modest gains most of the time with occasional heavy losses.
Conversely, a person of modest means surrounded by people who own a much nicer home or wear much nicer clothes and jewellery is likely to feel their social and financial aspirations are distant or nearly impossible. This leads them to accept high chances of small losses in exchange for tiny chances of massive gains. It also helps explain the long queues at the newsagency for Lotto tickets on pension day.
“This pattern explained why lower-income households often avoided diversified stock portfolios in favour of highly concentrated, risky bets,” says Dr Lee.
“When financial advisers observe clients concentrating investments in individual stocks rather than diversified portfolios, or choosing cryptocurrency over traditional assets, these decisions might represent rational responses to specific aspirational targets rather than poor financial education and judgement.”
Interestingly, he says this insight also helps explain why a millionaire surrounded by ultra-wealthy people might suddenly embrace high-risk strategies, despite having substantial assets to protect.
It’s all about keeping up with the Joneses. So by all means, look at how the rich invest, but choose your Joneses wisely and your investments likewise. Then concentrate on managing what you do have, well.
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