Warren Buffett once warned you should be prepared for any stock you own to ‘go down 50%' and still ‘be comfortable’ — but here’s how to boost your wealth outside the rocky US stock market

As the new generation of wealthy investors appears to be gravitating more to alternative investments – with 93% planning to increase that portion of their portfolio in the next few years – it is worth noting thaty billionaire Warren Buffett has consistently emphasized the value of patience and diversification.

At the 2020 Berkshire Hathaway shareholder meeting, advising investors to be in it for the long haul. "You’ve got to be prepared, when you buy a stock, to have it go down 50% — or more — and be comfortable with it, as long as you’re comfortable with the holding," he said.

For seasoned investors like Kevin O’Leary, the answer also lies in diversification. If you’re an accredited investor looking for their next opportunity, Mr. Wonderful has a golden rule that he says applies to almost any situation and investor.

If you’re looking to diversify with a larger amount of capital, consider taking a page from the playbooks of Kevin O’Leary and Warren Buffett.

Make your capital count

With the Consumer Price Index (CPI) rising 3.2% in the past year, according to the Bureau of Labor Statistics, many are left wondering how to protect their investments in such volatile times.

Beyond the lessons you can learn from the Oracle of Omaha and Mr. Wonderful, sometimes you need advice that’s tailored to your particular situation.

If you’re looking for guidance on the best way to invest, save and plan no matter what the future holds, it may be worth speaking to a financial advisor. A financial advisor can help you develop a long-term strategy, especially if you’re looking to hold a larger position in any one sector.

Professional advisors — like those at Advisor.com — can help you create a money management plan. Whether you’re looking to diversify your portfolio or grow your nest egg, Advisor.com connects you with experienced financial advisors who can help you reach your financial goals.

By partnering with a reputable advisor, you’ll gain expert insights into which alternative assets align best with your goals. Once you're matched, you can schedule a free consultation to discuss your financial strategy and explore the investment options available to best suit your needs.

Tangible assets

So what is O’Leary’s universal investing rule?

“So the rule is very simple,” O’Leary explained in a BNN Bloomberg interview. “This will work for you day in, day out, through every market cycle. No more than five per cent in any one stock, no more than 20 per cent in any one sector.”

Data shows traditional stock diversification alone is no longer enough for younger, wealthy Americans. According to a Bank of America survey, individuals aged 21 to 23 with at least $3 million in assets have only 25% of their portfolios invested in stocks – compared to 55% for older investors.

While the stock market is a staple component in any portfolio, certain alternative assets such as farmland, art and real estate shouldn’t be overlooked.

Farmland

Even Warren Buffett sees the value in tangible assets like farmland. At Berkshire’s 2022 shareholders meeting, Buffett famously said, “If you said, for a 1% interest in all the farmland in the United States, pay our group $25 billion, I’ll write you a check this afternoon.”

Buffett isn’t traditionally known for being an agricultural investor, but his willingness to invest billions in the sector should say something of its potential.

In fact, fellow billionaire and Microsoft magnate Bill Gates also recently bought up huge swaths of U.S. farmland. Furthermore, Nasdaq reports that U.S. farmland values rose by 10.2% in 2022, outpacing the 8% inflation rate that year.

Platforms like FarmTogether make getting in on the agricultural sector more accessible by allowing accredited investors to own a stake in physical U.S. farmland and earn passive income through leasing fees, crop sales and long-term appreciation.

FarmTogether uses proprietary sourcing technology and team of experts to ensure that only the top 1% of deals are offered to prospective investors.

With over 2.1 billion in capital deployed and a conservative investment approach, FarmTogether meets many of the key needs for investors seeking to diversify their portfolios over the long term.

Real estate

Farmland isn’t the only type of property worth looking at. Commercial real estate is a stable, income-generating asset class that could protect your portfolio. During the 2008 financial crisis, Buffett capitalized on the downturn by purchasing stocks in Goldman Sachs and General Electric.

Just as Buffett found opportunity during a period of uncertainty, commercial real estate could provide the diversification and growth your portfolio needs through a platform like First National Realty Partners (FNRP).

FNRP specializes in grocery-anchored retail with historically strong return potential acts as the deal leader, providing expertise, doing the legwork and streamlining the process. The firm has developed relationships with the nation’s largest essential-needs brands, including Kroger, Walmart and Whole Foods, and provides insights into the best properties both on and off-market.

Fine art

As global wealth shifts, art and collectibles are increasingly seen as strategic assets that can offer opportunities for stability and growth.

In 2022, ultra-high net worth individuals held an estimated $2.174 trillion in art and collectibles, a figure predicted to grow to $2.861 trillion by 2026, according to the Deloitte Art and Finance Report 2023.