The U.S. stock market recently hit new highs, but according to Michael Sonnenfeldt, founder of Tiger 21 — an exclusive network of ultra-high-net-worth investors — wealthy individuals aren’t chasing the hype.
“Actually, they just pulled back a couple points in the last quarter from the stock market and from real estate,” Sonnenfeldt told CNBC, noting that the average Tiger 21 member controls more than US$100 million (C$140 million).
So where is their money going?
Private equity remains a “strong” holding, he said, but members are increasingly allocating to areas that were once ignored. “For the first time, cash is coming up a little, fixed income is coming up a little, and gold and Bitcoin.”
The shift points to a more defensive posture. A stronger allocation to cash and fixed income signals a renewed appetite for liquidity and steady yields after years of near-zero interest rates, while growing exposure to gold — and even Bitcoin — reflects a search for alternative stores of value.
Don’t Miss
- Want to retire with an extra $1.3M? See how Dave Ramsey’s viral 7-step plan helps millions kill debt and build wealth — and how you can too
- A new nationwide survey of financial leaders warns Canada may face a recession in six months — protect your wallet with these 6 smart money moves ASAP
- Boomers are out of luck: Robert Kiyosaki warns that the ‘biggest crash in history is coming’ — here’s his strategy to get rich before things get worse
Gold
Sonnenfeldt says his members are approaching their portfolios with a little more caution these days. Naturally, when they’ve created as much wealth as they have, he adds, preservation is their highest priority.
That makes gold a natural destination. The precious metal has served as a store of value for thousands of years. It isn’t tied to any single country, currency or economy and it can’t be printed like fiat money. Investors often flock to it during periods of economic stress or geopolitical uncertainty — pushing prices higher.
Over the past 12 months, gold has climbed more than 40% — and more gains could be on the way. Both Goldman Sachs and JPMorgan forecast that gold could hit US$4,000 (C$5,600) an ounce by 2026.
One way to invest in gold that also provides significant tax advantages is through gold stocks, e-certificates or Canadian gold exchange-traded funds (ETFs). Investors can gain exposure through mutual funds that hold bullion.
These options provide the tax advantages of registered accounts with an added layer of protection against economic uncertainties or inflation, making the precious metal a potential hedge for long-term retirement savings.
Discount brokerages like CIBC Investor’s Edge makes it easy to purchase both gold e-certificates and gold ETFs directly from your trading dashboard.
Get 100 free trades when you open a CIBC Investor’s Edge account using promo code EDGE2526. Plus, get $150 or more cash back.† Offer ends March 31, 2026.
Bitcoin
Once considered a niche asset, Bitcoin has steadily moved into the financial mainstream. Many Canadians have taken the leap to buy or invest in Bitcoin, intrigued by a borderless, untraceable digital asset that forgoes traditional banking rules and regulations. The possibility of big jumps in value is another of crypto’s many attractive elements.
“Bitcoin as a market is still only a 10th the size of gold, but they both are secure assets in members’ minds,” Sonnenfeldt said. “For the first time, people aren’t talking about Bitcoin just as speculation, but actually an alternative asset that can be held during tough times. Not everybody believes in it, but those that do are making a big splash.”
Part of Bitcoin’s appeal is its built-in scarcity. Like gold, Bitcoin can’t be created at will by central banks. Instead, its maximum supply is capped at 21 million by mathematical algorithms.
Through CIBC Investor’s Edge, investors can gain exposure to cryptocurrency through ETFs that track the two biggest cryptocurrencies, Bitcoin and Ethereum, or a combination of the two.
In Canada, you can purchase both ETFs that hold Bitcoin — also known as spot Bitcoin ETFs — and those that hold Bitcoin futures contracts.
“Overwhelmingly weighted” in this asset — and Buffett’s simple strategy
Sonnenfeldt stressed that a slight pullback from stocks doesn’t mean his members are abandoning them.
“We’re still overwhelmingly weighted for the mid- and long-term in equities. So there’s long term bullish, but in the short term, it’s a little choppy water, so people are trying to steady the boat in a rocky road,” he said.
He noted that many Tiger 21 members built their fortunes as entrepreneurs, where outsized returns were possible, but sustaining those gains as investors is far more challenging. To illustrate the point, he invoked Warren Buffett’s success — and his famously simple strategy.
“You take Warren Buffett … his track record has been 20% but he’s been doing it for 65 years. Our members — to become Tiger members — had higher returns than 20% and they could never duplicate those returns as investors,” Sonnenfeldt said.
“So this divide between being an entrepreneur for five or 10 or 20 years and creating extraordinary wealth and then what do you do with it? It’s the reason why Warren Buffet has told his heirs to put it in the S&P, because even they won’t be able to get the benefit of his track record going forward.”
Buffett himself has often said, “In my view, for most people, the best thing to do is own the S&P 500 index fund.” He’s even written it into his estate plan, directing that 90% of his wife’s inheritance be placed in “a very low-cost S&P 500 index fund” after his passing.
An S&P 500 index fund gives investors instant exposure to 500 of America’s largest companies across a wide range of industries, providing diversification without the need for constant monitoring or active management.
The beauty of this approach is its accessibility — anyone, regardless of wealth, can take advantage of it.
With a self-directed trading account from CIBC Investor’s Edge, you can regularly invest in low-cost S&P 500 ETFs within tax-advantaged accounts like an RRSP, TFSA or FHSA.
With a Regular Investment Plan, you can schedule automatic purchases of stocks, exchange traded funds (ETFs), or mutual funds at intervals that suit your budget. It’s a simple way to stay disciplined — investing a little at a time, without having to watch the market or stress over timing.
Because it’s a self-directed account, you stay in control of every decision, from what you invest in to how often you contribute.
Enjoy low commission fees of $6.95 per trade and no annual fees for the first year. Investors who make over 150 trades in a quarter fall in the active trader category — and can enjoy a discounted commission rate of $4.95 per trade for stocks and ETFs.
Read more: Here are 5 expenses that Canadians (almost) always overpay for — and very quickly regret. How many are hurting you?
Real estate — revisited
Finally, Sonnenfeldt noted a small pullback in real estate allocations. But the asset class remains a time-tested way to preserve wealth — particularly in inflationary periods.
As inflation pushes up the cost of materials, labour and land, property values often climb in tandem. Rental income tends to follow as well, providing landlords with cash flow that adjusts with inflation.
In fact, Buffett has long highlighted real estate as a prime example of a productive, income-generating asset. In 2022, Buffett remarked that if you offered him “1% of all the apartment houses in the country” for $25 billion, he would “write you a cheque.”
Why? Because no matter what’s happening in the economy, people still need a place to live and apartments can consistently produce rent money.
If you don’t have the funds for a hefty down payment or want to avoid the hassles of being a landlord, consider investing in Real Estate Investment Trusts (REITs) or REIT exchange-traded funds (ETFs). REITs are publicly traded companies that own and operate income-producing properties, including apartment buildings, warehouses and medical centres.
These companies distribute most of their taxable income to shareholders, which means you can potentially access steady monthly or quarterly payouts without having to buy or manage a property yourself.
REIT ETFs take this one step further by bundling multiple REITs into a single, low-cost fund, giving you instant diversification across sectors and geographic regions.
For investors who want real estate exposure without tying up large amounts of capital, you can invest in REITs and REIT ETFs within registered accounts like a TFSA or RRSP with platforms such as CIBC Investor’s Edge.
What To Read Next
- Ray Dalio just raised a red flag for Americans who ‘care’ about their money — here’s why Canadians should limit their exposure to U.S. investments
- The ultra-rich are pulling back on volatile stocks right now, warns investing legend — here are the 4 assets they’re using to help shield their millions
- I’m almost 50 and don’t have enough retirement savings. What should I do? Don’t panic. Here are 6 solid ways you can catch up
- Here are the top 7 habits of ‘quietly wealthy’ Canadians. How many do you follow?
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.