Finfluencer and Wisdom Hatch founder Akshat Shrivastava in a post decoded how wealthy individuals in India manage and grow their investments, focusing on a simple yet powerful strategy of balancing stocks and real estate.
"Almost every rich person I speak with these days buys stocks and real estate (both) now," he explained.
Stocks, according to Shrivastava, provide growth and liquidity, while real estate offers stability and cash flow. This dual approach allows the wealthy to strategically rotate their capital for optimal returns. "In bad times, they leverage their real estate and raise cash, which they then invest in stocks for a higher alpha. When stocks become overvalued, they sell it and buy real estate with it," he added.
Highlighting Jeff Bezos as an example, Shrivastava emphasized, "Go and study -- Jeff Bezos, who is not even shy in terms of selling Amazon stocks and rotating that capital into real estate." This approach, he claims, underscores the importance of capital rotation. "It took me 10 years to realise this simple game," he noted.
However, not everyone agreed with this strategy. A user commented, "Examples you took are people with heavy cash flow. Ticket size for stocks is very low, but not for residential real estate. Retail users cannot afford commercial real estate due to high ticket sizes. On paper, it's easy to talk about accumulating real estate, but everyone cannot compare themselves to Jeff or Gates."
Another user highlighted the broader concept of asset allocation: "Yes, this is the core of asset allocation. Wealth needs to be divided between different asset classes. Buying when an asset is depressed in value will lead to above-normal returns. The key is that assets should not be correlated, like stocks and bonds, or even inversely related, like stocks and gold. As they say, asset allocation is the only free lunch in finance."