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Investing in any asset requires some level of risk. But having the right mindset about managing this risk over time is key, given the increased market volatility we’ve seen of late.
In order to weather these market storms, Bill Gates and other prominent investors have found that keeping cash on the sidelines is the safe bet.
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Currently the thirteenth-richest person in the world, and atop the Forbes rankings for the majority of the past two decades, the co-founder of tech behemoth Microsoft (MSFT) knows a thing or two about how not only to grow one’s wealth, but also how to hold it over time.
Here are a few foolproof tips gleaned from Gates for investors looking to do the same.
Where to begin?
One of the most prominent pieces of advice Gates has given in the past is: “save like a pessimist, but invest like an optimist”. This profound wisdom, which was distilled from a number of lessons Gates once provided in an in-depth interview with CNBC, stands true to this day.
Diving into Bill Gates’ first piece of advice, rainy day funds are critical, and you can choose from a range of assets to store your wealth over the long-term.
1. Keep cash on the sidelines
For those looking to simply sit on U.S. dollars but don’t want to have your savings eaten away by inflation, the conventional wisdom is to opt for a high-yielding savings account.
Wealthfront’s cash account is designed for those seeking a reliable and safe high-yield savings plan.
With full access to your money at all times, Wealthfront offers fast (and free) transfers to internal Wealthfront investing accounts, as well as external accounts. That’s the kind of liquidity and optionality Bill Gates might recommend.
Certificates of Deposit (CDs) are another excellent vehicle for a rainy day fund. CDs are typically less liquid than high-yield savings accounts, but for those looking to build Bill Gates-like wealth, the higher yields of CDs have the potential to provide even more compounding over the long-term.
Read more: Robert Kiyosaki says this 1 asset will surge 400% in a year — and he begs investors not to miss its ‘explosion’
Build wealth, and keep it
Two more of tips you can take from Gates’ overall strategy can be boiled down to:
2. Long-term investing gives you more protection from market fluctuations and the power of compound interest
For the vast majority of American households, around 70% of their net worth is tied up in real estate. And while the majority of this net worth consists of the primary residence, a significant number of investors look outside their principal residence to generate returns.
Arrived is a platform that allows individuals to invest in rental properties and vacation homes, without the headaches of being a homeowner or landlord.
Backed by world class investors like Jeff Bezos, Arrived provides access to SEC-qualified investments in residential real estate, a solid option for those looking to build a nest egg and keep it (just like Bill Gates).
3. Always be learning about how the market works and adapting your investing strategies
Outside of assets like real estate, the other major investment for most Americans is the stock market. If you’re invested in a 401K or similar retirement program, your capital for retirement is most likely in the stock market.
Those seeking advice on where to allocate their capital may want to consider trusted investment tips and insights from platforms like Moby. Moby provides you with access to the best investing research, broken down into simple and easy-to-understand formats.
Those looking to become a smarter investor in just five minutes can get access to their full library of stock and crypto reports, written by former hedge fund analysts — all with a 30-day money back guarantee.
Plan for the worst
Having contingency plans in place, to prepare for the ‘100 year storms’ Bill Gates often discusses, is important. While working toward ambitious goals (and having an optimistic outlook for the future) is important,
4. Build a strong safety net to cover potential catastrophic losses
Gates’ advice is to also put some worst-case scenario plans in place to help you manage the difficult times.
If you need advice on preparing for the lean times — or how to put your ambitious investment goals into action — Advisor.com is a great place to start.
Advisor.com connects you with participating unaffiliated third-party registered investment advisors (RIAs) through its matching tool or provides personalized investment advice via its in-house wealth management service, Advisor Wealth Management.
From their database of thousands, you can find a pre-screened financial advisor you can trust. You can then set up a free, no obligation consultation to see if they’re the right fit for you.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.