Goldman Sachs: 80% of Ultra-Wealthy Investors Use Alternative Assets. What Do They Know?
Goldman Sachs reports that 80% of investors with more than $10 million in investable assets use alternative investments. Among investors with more than $20 million, that figure rises to 91%.
Why are wealthy investors turning to alternative assets?
They want greater diversification, access to private markets, and investment opportunities beyond traditional stocks and bonds.
For retirement investors, this trend raises another important question:
Can you invest in alternative assets with an IRA?
In many cases, yes. A Self-Directed IRA, or SDIRA, can hold alternative assets such as real estate, private placements, promissory notes, certain precious metals, and cryptocurrency, subject to IRS rules.
Key Takeaways
- Goldman Sachs found that 80% of investors with more than $10 million use alternative investments.
- The percentage rises to 91% among investors with more than $20 million.
- Alternative assets can include real estate, private equity, private lending, precious metals, cryptocurrency, and other privately held investments.
- A Self-Directed IRA allows investors to hold many alternative assets inside a tax-advantaged retirement account.
- Alternative investing involves risk and requires careful due diligence.
- Self-Directed IRA investors must follow IRS rules, including prohibited transaction rules.
What Did Goldman Sachs Find About Wealthy Investors and Alternative Assets?
Goldman Sachs Asset Management surveyed 1,000 high-net-worth and ultra-high-net-worth investors in the United States with more than $1 million in investable assets.
The survey found that the use of alternative investments increases significantly as wealth increases.
According to Goldman Sachs:
- 39% of investors with $1 million to $5 million use alternatives
- 63% of investors with $5 million to $10 million use alternatives
- 80% of investors with more than $10 million use alternatives
- 91% of investors with more than $20 million use alternatives
The research shows a clear pattern. Wealthier investors tend to include alternative assets more frequently in their portfolios.
That does not mean these investors have abandoned stocks. Instead, many are broadening their portfolios beyond publicly traded stocks and bonds.
What Are Alternative Assets?
Alternative assets are investments that fall outside traditional publicly traded stocks, bonds, and cash.
Alternative investments can include:
- Real estate
- Private equity
- Private companies
- Private placements
- Promissory notes
- Private lending
- Certain precious metals
- Cryptocurrency
- Tax liens
- Other privately held investments
Alternative assets can offer additional diversification, but they can also carry greater risk, lower liquidity, complex valuation requirements, and less regulatory transparency than publicly traded investments.
Investors should carefully research any investment before committing funds.
Why Do Wealthy Investors Use Alternative Assets?
Wealthy investors use alternative assets for several reasons, including diversification, access to private markets, and opportunities that may not move in tandem with the stock market.
Do Alternative Assets Provide Diversification?
They can.
Alternative assets often behave differently from publicly traded stocks and bonds.
For example, rental real estate, a privately held company, and a secured promissory note represent very different types of investments.
Diversification does not eliminate risk. However, holding different types of assets can reduce an investor’s dependence on a single market or asset class.
Do Alternative Assets Provide Access to Private Markets?
Yes.
Many investment opportunities never trade on public stock exchanges.
Private markets can include:
- Privately held companies
- Real estate developments
- Private credit
- Venture capital
- Private equity
- Private real estate funds
- Promissory notes
These investments may offer opportunities that investors cannot access through a traditional brokerage account.
Can Investors Choose Assets They Understand?
Yes, and that can be one reason investors explore alternatives.
A real estate investor may prefer rental property.
A business owner may understand private companies.
An experienced lender may feel comfortable evaluating secured notes.
A Self-Directed IRA can allow investors to use their retirement funds to invest in certain assets they already know, subject to IRS rules.
Are Younger Wealthy Investors Also Choosing Alternative Assets?
Yes.
Bank of America’s 2026 Study of Wealthy Americans found that younger affluent investors approach portfolio construction differently from older generations.
The study reported that 67% of wealthy Gen Z and Millennial investors believe traditional stocks and bonds alone cannot produce above-average returns.
Younger wealthy investors also allocate more of their portfolios to alternative investments and cryptocurrency than older generations.
Bank of America reported that 88% of younger wealthy investors said they were likely to increase their allocations to alternative investments in the coming years.
These findings suggest that interest in alternative investing may continue to grow.
What Is a Self-Directed IRA?
A Self-Directed IRA is an individual retirement account that allows investors to hold a broader range of assets than many traditional brokerage IRAs offer.
Traditional brokerage firms often focus on publicly traded assets such as:
- Stocks
- Bonds
- Mutual funds
- ETFs
A Self-Directed IRA can hold many alternative assets, including:
- Real estate
- Private placements
- Promissory notes
- Private companies
- Certain precious metals
- Cryptocurrency
The account still receives the tax treatment associated with the type of IRA.
The primary difference is the expanded range of investment choices.
Can a Self-Directed IRA Invest in Real Estate?
Yes.
A Self-Directed IRA can invest in many types of real estate, including rental property, commercial property, vacant land, and certain real estate investment structures.
However, investors must follow IRS rules.
For example, the IRA owner generally cannot personally use property owned by the IRA.
The IRA must also properly pay expenses and receive income associated with the IRA-owned asset.
Can a Self-Directed IRA Make Private Loans?
Yes.
A Self-Directed IRA may make certain private loans through promissory notes.
Depending on the transaction, the loan may be secured by real estate or another asset.
Interest and principal payments generally return to the IRA.
Investors must avoid prohibited transactions and conduct appropriate due diligence on the borrower, collateral, loan terms, and risks.
Can a Self-Directed IRA Invest in Private Companies?
Yes, in many cases.
A Self-Directed IRA may invest in privately held companies or private placements.
However, the IRS places restrictions on transactions involving certain people and entities connected to the IRA owner.
Investors should carefully review ownership structures and prohibited transaction rules before proceeding.
What Are the Tax Benefits of a Self-Directed IRA?
A Self-Directed IRA generally follows the same basic tax structure as its traditional IRA counterpart.
With a Traditional Self-Directed IRA, investment earnings generally grow tax deferred until distribution, subject to applicable tax rules.
With a Roth Self-Directed IRA, qualified distributions may be tax free if IRS requirements are satisfied.
The investment itself does not create the tax advantage.
The retirement account structure provides the tax treatment.
Do You Need $10 Million to Invest in Alternative Assets?
No.
The Goldman Sachs study focused on wealthy investors, but investors do not need $10 million to learn about or use alternative investments.
A Self-Directed IRA can give individual retirement investors access to many types of alternative assets.
Some individual investments may require investors to meet specific financial or accreditation requirements, but many alternative asset categories remain available to investors with smaller portfolios.
The important question is not whether you have $10 million.
The better question is:
Do you understand the investment, its risks, and the IRS rules that apply to your retirement account?
What Rules Apply to Self-Directed IRAs?
Self-Directed IRAs must follow IRS rules.
One of the most important areas involves prohibited transactions.
Certain transactions between an IRA and a disqualified person can create serious tax consequences.
Examples of transactions that may create problems include:
- Personally using IRA-owned property
- Selling property you already own to your IRA
- Buying an asset from certain family members with IRA funds
- Using IRA assets for your personal benefit
- Paying IRA expenses with personal money in situations where the IRA should pay them
- Receiving improper personal compensation from an IRA investment
The rules can become complex.
Investors should work with qualified tax, legal, and financial professionals when necessary.
Does a Self-Directed IRA Custodian Evaluate Investments?
Generally, no.
A Self-Directed IRA administrator or custodian does not typically determine whether an investment is profitable, appropriate, legitimate, or suitable for an investor.
The investor makes the investment decision.
That makes due diligence especially important.
Before investing, investors may want to evaluate:
- The investment sponsor
- Financial statements
- Offering documents
- Valuations
- Liquidity
- Fees
- Risk factors
- Exit strategies
- Collateral
- Track record
- Conflicts of interest
Investors should never assume that an investment has received an endorsement simply because a Self-Directed IRA can hold it.
Why Are Alternative Assets Becoming More Popular?
Alternative assets give investors access to opportunities beyond traditional public markets.
Current research from Goldman Sachs and Bank of America shows that many wealthy investors already use alternatives as part of their investment strategy.
Technology has also made it easier for investors to learn about private investment opportunities, real estate, private credit, digital assets, and other alternatives.
Retirement investors have another potential advantage.
A Self-Directed IRA can allow them to hold many of these assets inside a tax-advantaged retirement account.
What Can Retirement Investors Learn From Wealthy Investors?
The lesson is not to copy every investment wealthy people make.
The lesson is to understand that stocks and bonds are not the only assets available to investors.
Goldman Sachs found that 80% of investors with more than $10 million use alternative investments.
That statistic highlights how frequently wealthy investors look beyond traditional markets when building diversified portfolios.
A Self-Directed IRA can give retirement investors the ability to explore many of those same asset categories.
You choose the investment.
You conduct the due diligence.
You decide whether the investment fits your financial goals.
Frequently Asked Questions About Alternative Assets and Self-Directed IRAs
What are alternative assets?
Alternative assets are investments outside traditional publicly traded stocks, bonds, and cash. Examples include real estate, private companies, private placements, private loans, certain precious metals, and cryptocurrency.
Why do wealthy investors invest in alternative assets?
Wealthy investors may use alternative assets for diversification, access to private markets, income opportunities, and exposure to investments outside the public stock and bond markets.
What percentage of ultra-wealthy investors use alternative assets?
Goldman Sachs found that 80% of investors with more than $10 million in investable assets use alternative investments. Among investors with more than $20 million, the percentage rises to 91%.
Can an IRA invest in alternative assets?
Yes. A Self-Directed IRA can hold many alternative assets, including real estate, private placements, promissory notes, certain precious metals, private companies, and cryptocurrency, subject to IRS rules.
Is a Self-Directed IRA different from a regular IRA?
The tax structure remains similar, but a Self-Directed IRA allows a broader selection of investments. Many traditional brokerage IRAs limit investors primarily to stocks, bonds, mutual funds, and ETFs.
Can I buy real estate with my IRA?
A Self-Directed IRA can purchase real estate, but the transaction must follow IRS rules. The IRA owner cannot personally use IRA-owned property or engage in prohibited transactions with disqualified persons.
Can a Roth IRA hold alternative assets?
Yes. A Self-Directed Roth IRA can hold many alternative assets. Qualified Roth IRA distributions may be tax free when IRS requirements are met.
Are alternative investments risky?
Yes. All investments involve risk. Alternative investments may involve additional risks such as limited liquidity, difficult valuations, complex structures, fraud risk, and limited public information.
Does uDirect recommend investments?
No. uDirect IRA Services provides administrative and educational services. uDirect does not provide investment, tax, legal, or financial advice and does not endorse or evaluate investments.
Ready to Explore More Investment Choices?
Your retirement account may offer more possibilities than you realize.
At uDirect IRA Services, we help investors understand how Self-Directed IRAs can hold alternative assets such as real estate, private placements, promissory notes, certain precious metals, cryptocurrency, and more.
Visit uDirectIRA.com to learn how Self-Directed IRAs work and explore the investment options available for your retirement funds.
You choose the investment. We help you navigate the self-directed retirement account process.
Important Disclosure
uDirect IRA Services provides administrative and educational services for Self-Directed retirement accounts. uDirect does not provide investment, tax, legal, or financial advice and does not endorse, promote, or evaluate investments. All investments involve risk, including the possible loss of principal. Investors should conduct their own due diligence and consult qualified financial, tax, and legal professionals before making investment decisions.
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