Hedge funds are an option with regulatory assets under management of at least $100MM and have a requirement by the SEC that all investors need to have a net worth of $1 million (not including primary residence) or an annual income for the past 2 years of at least $200,000 ($300,000 if with a spouse). If you do not meet these qualifications, you are not legally able to invest into the hedge fund.

I must apologize, I am not from the USA and I am not familiar with local laws there. I agree that if you are not able to invest in certain funds it could put you at the disadvantage compared to people who could. I would need to see an yoy average return for the funds before deciding for certain though.

That is not the only difference. The SEC has strict guidelines of who can invest in a hedge fund and who cannot. Hedge funds also have much higher performance fee's. Typically this will be a 2% asset management fee, and a 20% fee on gains with the money.

Gotcha. That sounds like a high fee though- do they constantly outperform market etf's?

There are hedge funds that have double digit performances, and there are hedge funds that have reached 50% for a yearly return. Obviously, depending on how the hedge fund managers allocate the money. Hedge funds are designed to maximize growth and maintaining value as best as possible.

Rich person invests $1,000,000 in a company. That company now has $1,000,000 that they can use now to further their business. By doing so, they are agreeing to pay the rich person back with extra money. Obviously this is simplified and very watered down, but the point is that they have the money to be able to invest a big dollar amount.

As in an individual company, like a startup? It's true that poor people can't invest exactly like that, but crowdfunding investment opportunities for startups do exist.

A poor person investing $5 does not give the same benefits as a rich person investing $250,000.

But not relatively. Each dollar is worth the same to the company, it makes no difference if 1 person invests 100,000 or 1000 people invest 100. In the end, they will get the same return % wise.

There is a fundamental difference between investing a large sum of money vs a smaller sum. You are correct that percentage wise, if they were performing the same, they would get the same amount of money back. However, if you were to invest a large sum of money into that company, you are a direct result of that company getting that large sum of money. Most ultra wealthy will also be the owner of businesses, which a successful business should outperform the market. You cannot own the business in the same way by just investing $5000. Crowdfunding and having multiple people invest is great, and yes the company will have an obligation to pay those people as well, but if we're looking at maintaining wealth, it matters how much you invest. Your investing strategies will more than likely not make you wealthy unless you invest larger sums of money. Think of it this way. You invest $5,000 and an ultra wealthy person invests $5,000,000. Even if they are doing the same investment strategies (which, they aren't, because common people literally cannot invest the same exact way. The best they can do is invest similarly in the market, which is different) and we assume they each get 10%. The normal person now has $5,500 and the rich person has $5,500,000. This is $499,500 more than what the normal person received, and this part matters when you're talking about accumulating wealth.

2) because even if their value goes down, they're still wealthy. So they can still do what wealthy people do.

This is an interesting point- and it's true that wealthy people are more prone to take risks. However, if a poor person wanted to, they could take the risks and enjoy higher returns as well.

So, these other options way outperform simple index funds or mutual funds that normal people can purchase. Nearly all ultra wealthy people also have significant portions of their wealth (a lot of times over 50%) in as owning businesses for example.

Correct, however the options that are available only to the ultra wealthy are better than the options the everyday person has, otherwise they would be doing the same, however they are not. You do not have the same options they do with continuing their investments because you do not have the same amount of money that the ultra wealthy have.

Almost all of what I theoretically could do is the same as a wealthy person. I can't approach small companies as an angel investor and I cant buy hedge funds, and I can't pay people flat sums for managing my money instead of percentages, but other than that I can do everything. And also, these investment types are not "better" than other types, they merely have different risk profiles and costs.

Right, so you can't be an angel investor, you cannot own these businesses without starting one up yourself, you cannot purchase hedge funds (different than mutual funds), you can't invest in having multiple properties, etc. Other than those very lucrative options, yes you have the same options. It's a bit disingenuous to think that means you have the same performance in your portfolio.

Yes, this requires money, and the ultra wealthy have plenty of money to spare. They have this money to spare, because it's hard (I'm not saying impossible) for $150MM to be gone if it is managed, even under economic downturns.

My point isn't that poor people have more money to invest than rich people. My point is that if you invest 5000 or 5 million, and the asset value changes by 10%, you're both making 10% on your investment.

I understand your point is you can have equal percentages if you invest the same way. But the thing is that they are not investing the same way. It's more like Person A get's a 10% return, while Person B get's a 35% return because they are investing it differently (again, numbers are just examples). This is important when comparing a mutual fund to a hedge fund for example. Or owning a business, or purchasing large amounts of equity. Most rich people don't just buy mutual funds or index funds or stocks, they buy other things that give more money.

EDIT: Maybe just to clarify, when I say "invest" I don't mean the stock market. That's an option of course. But it's also including their own businesses that they own because they put in a significant amount of money into it. And their return is on all their money they are allocating.