Benefits High-Net-Worth Individuals Get That The Rest Of Us Don't

It pays to be rich. Although money is a massive facilitator of a number of common-use goods and services, it can also open doors to rooms that are not accessible to others. Whether it's memberships to elite clubs, early access to pre-release or limited-edition luxury products, or discounted rates on interest, if you're a high-net-worth individual (HNWI), a lot of financial institutions and businesses are willing to bend their rules exclusively for you. 

High-net-worth individuals are people who have at least a million dollars in liquid assets. Hard-to-liquidate investments generally do not get included when calculating net worth. Nonetheless, the higher the net worth, the more effort it takes to maintain and grow it. To manage their investable assets, high-net-worth individuals often claim the advantages of private banking, which affords them highly personalized services, estate planning, tax advice, and discounts on interest rates. But most importantly, high-net-worth individuals also get exclusive access to investment opportunities that are generally not available to the general public, such as hedge funds and venture capital investments, which promise incredibly high returns.

Although HNWIs also get early access to initial public offerings (IPOs) and real estate deals that are off the market, one of the biggest privileges they enjoy is the opportunity to invest in hedge funds. The strategy behind hedge funds is attributed to A.W. Jones, who, in 1949, began the practice of "hedging" risk by going long and short on undervalued and overvalued stocks, respectively, and using leverage to increase returns. This strategy, alongside an agreement to keep the manager's investments in the fund to align incentives with the investors ("skin in the game"), is a concept largely still followed by hedge fund companies today.

Since hedge funds are bound by fewer Security and Exchange Commission (SEC) regulations, they have potential for both massive gains and massive losses. For instance, in an exceptional year for most top-tier hedge funds, Bridgewater Associates' Pure Alpha fund generated a whopping growth of 34% in 2025. Hedge funds also give HNWIs the opportunity to invest in private equity and art — items beyond the grasp of mutual funds. 

However, you need to have at least a million dollars in liquid assets to be able to invest in a hedge fund. Alternatively, you can also qualify as an accredited investor if your annual income has surpassed $200,000 for the last couple of years and is expected to stay at this level during the current year. There is also a minimum amount that you have to invest in these funds, which can range anywhere from $100,000 to $1 million. These barriers are in place primarily because of the high risk of loss associated with this type of investment. High-net-worth individuals have a greater capacity for absorbing such losses.

Venture capital (VC) is one of the ways startup businesses with no money get loans, and VC funds are an investment vehicle available only to the rich. Venture capitalists invest in startups that may not have a steady cash flow, and losses are common. In fact, a large percentage of these early-stage companies (as many as 40%) lose all the money invested in them by VCs, according to research by Shikhar Ghosh, a senior lecturer at Harvard Business School (via The Wall Street Jounral). Nonetheless, the startups that do perform well more than make up for these losses, and this is how top-tier venture capital funds outperform the market. In fact, the top-quartile VC funds have provided an average annual return of 28.2% from 2001 to 2022, per Adams Street.

Like hedge funds, VC firms have a high barrier to entry. Only individuals with a net worth of $1 million or higher can invest; again, this figure does not include the value of the investor's primary residence. The annual income benchmark is also very similar to that of hedge funds — to qualify, an individual investor would need an annual income of $200,000 for the past two years, whereas a couple would have to be making at least $300,000. These benchmarks block out 90% of the entire American population. Just like with hedge funds, the reason for implementing high entry barriers is to protect individuals who do not have the financial cushion to absorb the losses that may be possible these investments.