How much money does it take to be wealthy? A Charles Schwab survey conducted last year found that Americans think a net worth of $2.2 million is required. But that's only a fraction of the $30 million needed to have an ultra-high net worth.

As you might imagine, the super-rich spend their money in different ways than the average American. They also invest differently. Here are three perhaps surprising ways the ultra-wealthy invest their money.

Two people on a private jet are holding wine glasses.

Image source: Getty Images.

1. Private equity

The super-rich put plenty of money in stocks just as many Americans do. However, alternative investments comprise roughly 50% of assets owned by the ultra-wealthy compared to only 5% for the average investor. What's the top alternative investment? Private equity.

Publicly traded companies list their shares on stock exchanges such as the New York Stock Exchange and Nasdaq. Anyone can invest in them. Investing in private equity, on the other hand, is only available to institutional investors and accredited investors who have an annual income of at least $200,000 for two consecutive years and/or a net worth of $1 million or more excluding their primary residence. Holding a Series 7, Series 65, or Series 82 license also qualifies a person as an accredited investor.

Among high-net-worth families, 27% of their portfolios are invested in private equity, according to a survey from investing firm KKR. This percentage narrowly trails the 31% allocation these investors have in listed equities.

Private equity is the only alternative investment that has regularly outperformed the S&P 500 index. However, there have been periods when the S&P 500 beat private equity.

^PEA Chart

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Private equity continues to build momentum as an investing choice. A whopping 79% of institutional investors plan to increase or significantly increase their asset allocation in private equity by 2025, according to a survey conducted by alternative investment firm Prequin.

2. Private credit

Around 4% of high-net-worth families' portfolios are invested in private credit, according to the KKR survey. What is private credit? It's where investors loan money to private companies. In return, they receive interest payments and (hopefully) receive all of their investment back over time.

Private credit is often less risky than private equity. That's because debt holders receive priority if a company files for bankruptcy. However, private credit isn't a risk-free investment. There's still a possibility of a big loss.

Like private equity, private credit is gaining popularity. Prequin found that 67% of institutional investors plan to increase or significantly increase their allocations to private debt (a broader category that includes private credit) by 2025.

3. Luxury goods

Some ultra-wealthy individuals also invest in luxury goods. These goods include designer handbags, fine wines, classic cars, watches, jewelry, and more.

Are luxury goods a good investment? Yes and no. Over the 10 years ending on Dec. 31, 2022, the Knight Frank Luxury Investment Index soared 137%. However, during this period the S&P 500 delivered a total return of nearly 237%. Some types of luxury goods have beaten the stock market, though. For example, rare whisky prices skyrocketed 373% higher.

There are some good reasons why luxury goods typically don't make up a large percentage of ultra-wealthy individuals' portfolios, though. They tend to be illiquid. Some luxury goods require steep costs for maintenance. The market for luxury goods is also largely unregulated, which increases the risks for investors.

A better alternative

Investors who aren't worth $30 million or more don't need to fret that they aren't investing like the super-rich. As previously mentioned, most alternative investments don't perform as well as the S&P 500 over the long run.

Warren Buffett -- a longtime member of the ultra-high-net-worth club -- stipulates in his will that most of the cash inherited by his family be invested in low-cost S&P 500 index funds. For most investors, regardless of how much money they have, Buffett's choice is a better alternative than any alternative investment.