How To Invest Like a Billionaire (Within Your Budget)

If you’re looking to become a billionaire, the odds might be more stacked against you than you imagine.

When you really break down the math, even in a wealthy country like the U.S., there are only about 813 billionaires out of a population of 340 million. Worldwide, there are still only an estimated 2,781 billionaires total, which goes to show it’s not a financial goal that many achieve.

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However, while it’s certainly an uphill climb to reach a 10-digit net worth, you can still use some investment strategies that billionaires employ regardless of your budget. When it comes to growing your wealth, it’s not a bad idea to do as the uber-wealthy do.

Here are some of the investment strategies that billionaires use or recommend that you can integrate into your own portfolio.

Start Your Own Company

By far the most common way that Americans break into the Forbes list of billionaires is by starting their own company. Of course, simply leaning into the entrepreneurial spirit and starting a business is no guarantee that you will accumulate massive wealth, but at least according to the list of billionaires, it’s the choice that gives you the best chance. 

The good news is that you can usually start a business with little to no capital of your own, as you can raise startup funds through loans or investors as well. If you can come up with the right product or service at the right price for an economy that needs it, there’s no limit to the success you can have.

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Create Passive Income

Whether using it to build their wealth or simply sustain it, most billionaires devote a significant amount of their portfolios to producing passive income streams. In many cases, this comes in the form of rental real estate. People will always need places to live, and if you pick rental properties in desirable locations, you’ll likely always have an income stream. 

Best of all, at least from the perspective of an investor, rents only go up over time, while mortgage payments are fixed. This means that over time, your cash flow will only grow. Once your mortgage is paid off — or if you’re in a position to buy properties with cash — then those rising rental payments are pure profit.

Once billionaires have built their wealth, they often use income funds, preferred stocks and/or high-dividend common stocks to generate cash flow. This way, their money isn’t just sitting in a bank account but actually generating additional wealth.

Both rental properties and income-generating securities are investments that anyone can access, not just billionaires. Simply speak with your local realtor or your brokerage firm to get started. 

Buy Low-Cost Index Funds

One of the most commonly cited pieces ofinvestment advicefrom a well-known billionaire is that most investors should simply use low-cost index funds. This gem comes from the “Oracle of Omaha” himself, Berkshire Hathaway CEO Warren Buffett. Buffett has long been a believer that paying forinvestment adviceis often misguided and that a simple S&P 500 index fund can outperform most active stock pickers. 

The billionaire put his money where his mouth was back in 2008 when he made a bet with Protege Partners that the S&P 500 would outperform a portfolio of five hedge funds over the ensuing 10 years. By the end of the wager, Buffett’s simple S&P 500 had more than tripled the performance of the hedge funds, returning 125.8% vs. the 36.3% returned by the active managers. Buffett has also directed the executor of his estate to put 90% of his assets in an S&P 500 index fund after his demise.

Stumble Into an Inheritance

Although you can invest like a billionaire in many ways, if you want to become a billionaire simply by investing in stocks, you’ve got a long road ahead of you. According to calculations by Mark Hulbert, founder of the Hulbert Financial Digest, you’ll need more than $12 million starting at age 25 if you want to retire as a billionaire by age 65. That’s essentially impossible to do unless you enjoy a large inheritance.

“Stumbling into an inheritance” is a facetious investment strategy, but it does highlight how difficult it is to become a billionaire. In fact, the second-most common way that billionaires on the Forbes list got that way is indeed from receiving a large inheritance.

Caitlyn Moorhead contributed to the reporting for this article.

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This article originally appeared on GOBankingRates.com: How To Invest Like a Billionaire (Within Your Budget)

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