High-Net-Worth Investors and the Behavioral Economics of Real Asset Risk in 2025

The investment behavior of high-net-worth individuals (HNWIs) in 2025 reflects a complex interplay of macroeconomic pressures, evolving priorities, and psychological biases. As global markets grapple with inflationary shocks, geopolitical volatility, and the lingering effects of technological disruption, HNWIs are recalibrating their strategies to balance income generation, risk mitigation, and legacy-building. Central to this recalibration is the growing influence of behavioral economics, which reveals how cognitive biases shape decisions about real assets and alternative investments.

The Shift to Income and Tangible Assets

According to a Forbes Research survey, 82% of affluent investors now prioritize generating income as their primary investment goal, a marked departure from earlier decades when long-term capital appreciation dominated. This shift is driven by the need to hedge against low-yield environments and the erosion of purchasing power. Real estate remains a cornerstone of this strategy, with 81% of HNWIs owning a primary residence and 30% holding rental properties, according to an Altoira analysis. However, the perceived role of real estate has evolved: only 21% of HNWIs in 2025 view high-end property diversification as essential for long-term financial success, down from 35% in 2024, the Forbes survey found. This suggests a pragmatic recalibration, where real assets are valued more for their cash flow and inflation-hedging properties than as speculative vehicles.

Private market investments-encompassing private equity, venture capital, and direct business ownership-are gaining traction as HNWIs seek greater control and diversification. These assets now account for a significant portion of portfolios, with public equities comprising just 47% of the average allocation, the Altoira analysis notes. The appeal lies in their potential for higher returns and insulation from public market volatility, though they demand a longer time horizon and greater due diligence.

Generational Divides and Digital Assets

A generational divide is emerging in risk tolerance and asset preferences. Younger HNWIs (under 35) are far more open to cryptocurrencies, with 52% owning digital assets compared to near-zero adoption among older investors, the Altoira analysis shows. This cohort allocates an average of 9% of their portfolios to crypto, viewing it as a store of value and a hedge against fiat currency devaluation. Conversely, older investors remain skeptical, favoring traditional hard assets like gold and farmland. This divergence underscores how age and experience shape perceptions of risk and reward, a dynamic behavioral economics seeks to quantify.

Behavioral Biases and Their Consequences

The decision-making of HNWIs is increasingly scrutinized through the lens of behavioral economics. Confirmation bias, for instance, leads investors to overvalue information that reinforces their existing views while dismissing contradictory evidence, the Altoira analysis warns. This can result in overexposure to certain asset classes, such as overhyped IPOs or speculative real estate markets. Loss aversion, another pervasive bias, causes investors to cling to underperforming assets-such as cryptocurrencies or tech stocks-out of fear of realizing a loss, the Forbes survey observed. Overconfidence, amplified by the proliferation of real-time data and DIY investment platforms, often leads to excessive trading and suboptimal returns, the Forbes survey also noted.

Artificial intelligence is emerging as a counterweight to these biases. AI-driven platforms now incorporate behavioral nudges, such as reminders of historical market cycles or automated rebalancing, to encourage disciplined, long-term investing. For example, an algorithm might prompt an investor to reconsider selling during a temporary downturn by highlighting the long-term trajectory of the asset. Advisors are also adopting goal-based frameworks and emotional coaching to help clients navigate psychological pitfalls, the Altoira analysis adds.

Asset Protection in a Fragmented World

HNWIs are increasingly prioritizing asset protection strategies to safeguard wealth against geopolitical and economic shocks. Diversification across geographies and asset classes is no longer sufficient; investors are now seeking "asymmetric protection," where the potential downside is capped while upside remains open. Hard assets like gold and farmland are being deployed as inflation hedges, while energy and infrastructure investments benefit from government incentives for renewable projects, according to a HAR blog post.

The use of debt is also being reined in. Many HNWIs maintain low leverage to preserve liquidity and avoid the compounding risks of margin calls during market stress, the Altoira analysis reports. This cautious approach reflects a broader recognition of the interconnectedness of global markets and the fragility of leverage in times of uncertainty.

Conclusion

The investment landscape for HNWIs in 2025 is defined by a tension between the pursuit of income, the mitigation of risk, and the influence of psychological biases. While real assets and private markets offer tangible benefits, their value is contingent on disciplined, rational decision-making. Behavioral economics provides a framework to understand and counteract the cognitive distortions that can derail even the most sophisticated investors. As the world grows more complex, the ability to marry empirical analysis with behavioral insight will determine the success of those seeking to protect and grow their wealth.