A Wealth Ladder For Investing $1 Million To $100 Million

Alan Stalcup, founder and CEO of GVA Real Estate Group, recommends different investment strategies at three wealth levels: broad stock-market exposure and cash at $1 million, selective private-market investments at $10 million, and a wider mix of income-producing assets at $100 million.

Stalcup has built businesses and invested in commercial real estate, overseeing billions of dollars in transactions. His framework assigns a different purpose to a portfolio at each level: accumulating capital, pursuing selective growth and generating income.

For an investor with $1 million in investable assets, Stalcup recommends putting about 90% in an S&P 500 index fund and 10% in cash. The allocation would vary based on the investor’s time horizon, but he considers a low-cost index fund and a cash reserve sufficient for this stage.

Cash would cover unexpected expenses and provide funds for future investment opportunities. Bonds are absent from the model because Stalcup views their current yields and diversification benefits as less attractive than in earlier periods.

At $1 million, the focus is accumulation. Stalcup advises against adding private equity, venture capital, real estate or other specialized assets before the portfolio can absorb their fees, risks and limited access to capital.

The allocation changes at about $10 million. An investor at that level may be able to move 20% to 30% of the portfolio away from the S&P 500 and cash and put it into investments with higher potential returns.

Private equity and venture capital become more practical options, although individual investments can lose most or all of their value. A manager investing across 30 to 50 companies can spread that risk, with gains from a small number of successful businesses offsetting losses elsewhere.

Exchange-traded funds focused on venture capital and late-stage private companies can provide a more liquid entry point. These funds do not replace a dedicated private-equity manager, but they may suit investors who are not ready to commit capital for five to 10 years.

At $100 million, Stalcup recommends reducing the portfolio’s reliance on public equities and adding assets that can produce income. The S&P 500 would account for less than half of the allocation, while another 20% to 30% would go to real assets.

Those assets could include real estate, operating companies, minerals, and oil and gas rights. Private equity and venture capital would remain in the portfolio, alongside about 10% in cash.

Stalcup’s broad allocation divides the portfolio into roughly three parts: public equities; private equity and venture capital; and real estate and energy. The proportions would vary based on the investor’s age, income needs, tolerance for illiquidity and market conditions.

GVA Real Estate Group acquires multifamily properties and seeks to increase their value. Stalcup’s recommendations are based on his experience as an entrepreneur, investor and commercial real estate executive.