Super-rich Americans are giving up on the stock market and holding more cash and alternative assets. Here's why — plus a few places they might put their wealth instead

The retreat of the ultra-wealthy from the stock market could offer some early warning for retail investors, especially with the most recent stock market dip in mind.

The S&P 500 declined 3%, Dow Jones declined 2.6% and the NASDAQ — the biggest loser of the crash — dropped 3.4%, Forbes reported at the time.

Alongside this, rampant inflation and rising interest rates have generally made stocks less attractive.

Meanwhile, cash and cash equivalents can generate better-than-anticipated returns. A two-year U.S. government treasury bond currently offers a yield that’s hovering around 4.0%.

Given their higher level of volatility and risk, stocks are only an attractive investment if they offer a significantly better return than safer options like U.S. government bonds or certificates of deposit (CDs).

With returns on very low-risk investments so elevated, wealthy investors may be seeing better alternatives elsewhere.

Better alternatives

The Capgemini World Wealth Report found that high net worth individuals increased their portfolio allocations to alternative assets from 13% in 2023 to 15% in 2024.

If you're interested in taking this approach and not having to deal with the stock market ‘s volatility, there are accessible ways to invest in alternative assets and shield yourself from another potential crash.

A creative alternative

Fine art tends to be a good investment as its value remains generally more stable compared to market fluctuations. But, art has not historically been the most accessible asset to invest in. Not everyone has the time — or cash — to sit an auction and wave a paddle for the highest bid.

Luckily with Masterworks, you can dip your toes into the world of fine art without dropping millions on a painting at an auction. Their investment platform allows you to buy and sell shares of iconic works of art — as in Banksy and Picasso-level iconic — just as you would stocks.

It’s simple to get started. Once you join the Masterworks community of more than 280,000 members, you can tap into a whole lot of data and insights and use them to guide you in choosing the art you want to put your money into.

Real estate

Another alternative option that has proven to provide solid returns amidst economic turmoil is real estate. While real estate can be a daunting investment due to high prices, it is possible to get in on this asset without dropping all of your cash.

For example, adding real estate to your portoflio allows you to benefit from the potential for steady income and long-term appreciation while reducing your exposure to stock market volatility.

If you're looking to tap into the investment potential of real estate but don't have the funds for a traditional down payment, consider investing in home equity instead with a platform like CityFunds.

Here’s how it works: The company allows you to invest in portfolios of owner-occupied homes. In exchange for the cash, Cityfunds secures an interest in the home's future value. As the home value appreciates, so does the value of Cityfunds equity investment alongside the homeowner.

With a community of over 10,000 users, CityFunds allows you to benefit from the $20 trillion home equity market across various cities.

So you can invest in the housing market of a city you love for as little as $500, without having to deal with high home prices, an expensive mortgage or the hassles of being a landlord.