NBER Study Reveals How Millionaires Actually Invest — and It's More Conservative Than Expected

What the NBER Study Found About Millionaire Portfolios

A new study from the National Bureau of Economic Research (NBER) has examined how millionaires actually make investment decisions — and the findings challenge some common assumptions about how the wealthy manage their money. The research analyzed the investment choices of more than 1,000 individuals with capital investments exceeding $1 million, comparing their priorities and reasoning with those of less wealthy investors.

The study found that millionaires and non-millionaires approach stock allocation from fundamentally different starting points. Wealthy investors tend to rely on professional financial advisers, factor in their pension horizon and personal experience, and weigh maximum risk tolerance. Non-millionaires, by contrast, are primarily focused on pension security and maintaining cash reserves for emergencies and ongoing bills. Millionaires also place less importance on loss risk, media opinion and the goal of becoming richer than other millionaires.

Despite these differences, the average millionaire portfolio is not as aggressive as might be expected. It consists of 53.3% equities, 20.1% financial instruments, 5.9% real estate and 4.1% government bonds. According to Nicholas Colas, co-founder of DataTrek Research, cited by Yahoo Finance, these portfolios are considerably more conservative than previously assumed. A notable pattern also emerged: millionaires tend to split their investments between high-potential assets and very safe holdings.

One striking finding stands out. About 15% of millionaires have 10% of their net worth invested in a single company. The study suggests this may be linked to the fact that most wealthy investors believe they can identify a particularly good investment — a confidence that leads a meaningful minority to concentrate rather than diversify.

Why the Wealthy Invest Differently — and What It Signals for Advisers

What Millionaires Optimize For — and What They Ignore

The study's most revealing insight is not the allocation percentages but the decision framework behind them. Millionaires allocate stocks based on professional advice, pension horizon and personal experience, while treating loss risk, media opinion and relative wealth status as secondary. Non-millionaires invert this: pension security and emergency cash dominate. This is a structural difference, not a sophistication gap — wealth removes the liquidity constraint that forces ordinary investors to prioritize safety, freeing millionaires to optimize for long-term returns instead.

The Conservative Core Behind the Concentrated Bets

At first glance, a 53.3% equity allocation looks aggressive. But the study's authors and DataTrek's Nicholas Colas describe these portfolios as far more conservative than assumed. The apparent contradiction resolves when you look at the barbell structure: large positions in high-potential assets paired with very safe holdings. Government bonds at 4.1% and real estate at 5.9% are modest, but the 20.1% in financial instruments likely includes diversified funds that cushion the equity exposure. The portfolio is not a growth-maximizing machine — it is a wealth-preservation structure with a growth engine attached.

The Single-Stock Bet Is the Real Outlier

The finding that 15% of millionaires hold 10% of their net worth in one company deserves more attention than the headline allocation figures. For context, standard portfolio theory treats single-stock concentration above 5–10% as a significant idiosyncratic risk. The study attributes this behavior to overconfidence — most wealthy investors believe they can spot an exceptional investment. This is consistent with broader behavioral finance research showing that wealth and investing experience can increase confidence without necessarily improving stock-picking ability. For wealth managers, this represents both a risk to flag and an opportunity: clients who concentrate by conviction are the ones most in need of structured advice on position sizing.

What This Means for the Wealth Management Industry

The study implicitly validates the role of professional advisers in millionaire portfolios — advice is a primary input, not an afterthought. For banks, asset managers and independent advisers, the finding supports continued investment in advisory relationships rather than pure self-directed platforms at the high-net-worth tier. It also suggests that the industry's messaging around risk should shift: millionaires are not ignoring risk, they are defining it differently, prioritizing maximum-risk assessment over everyday loss aversion. Advisers who understand this distinction can better align their recommendations with how wealthy clients actually think.

Where the Study's Limits Lie

The research covers over 1,000 investors, which is a meaningful sample but not exhaustive, and it captures a snapshot of behavior rather than tracking outcomes. It does not establish whether millionaire portfolios outperform simpler strategies — only that the decision process differs. Readers should treat the allocation figures as descriptive of this group, not prescriptive for anyone else.

What Ordinary Investors Can Realistically Take From This

The study's core message for ordinary investors is that millionaire portfolios are not a template to copy — they are the product of a decision framework built on professional advice, long horizons and the absence of liquidity pressure.

• If you are investing without an emergency cash buffer, the study's non-millionaire priorities — pension security and accessible cash — are the correct starting point, not the millionaire allocation. Build that buffer before increasing equity exposure.
• The barbell structure (high-potential assets plus very safe holdings) is replicable in principle: a diversified core holding plus a smaller satellite position in higher-risk assets. But the study does not show this outperforms a simple diversified portfolio, so treat it as a risk-management choice, not a return strategy.
• The 15% single-stock concentration finding is a caution, not a model. If more than 10% of your net worth sits in one company — including employer stock — the study's own framing suggests this reflects overconfidence rather than superior insight.
• For advisers and wealth managers: the study confirms that advice is a primary input for millionaire clients. Positioning around maximum-risk assessment and long-horizon planning, rather than everyday loss aversion, aligns better with how this client segment actually decides.