Which worries you more, the European debt crisis or the looming “fiscal cliff” in the U.S.? Learn how the high net worth view the issues.
Roughly two-thirds of the nation’s high net worth investors are adjusting their investment strategies in response to the European debt crisis, while just over half are making changes in response to the U.S. fiscal cliff, according to a new Millionaire Corner survey.
The majority of high net worth investors believe that Congress will prevent the national economy from “falling off the cliff,” according to a survey of more than 1,400 investors conducted by Millionaire Corner in July. More than 8 percent say they are “not at all concerned” about the expiration of the Bush-era tax cuts coupled with mandated cuts in federal spending. Roughly 44 percent say they are “mildly concerned,” anticipating that a political consensus will minimize the effects of the fiscal cliff, though taxes will go up and the levels of government services will go down. Close to 47 percent are “very concerned” and worry that the nation will slip back into recession.
These concerns are prompting 51 percent of high net worth investors, who have $1 million or more in investable assets, to adjust their investment strategies. More than 30 percent of high net worth investors are increasing their cash reserves and more than 15 percent are increasing their investment in recession-proof companies. Eleven percent are allocating more of their investable assets to tax-sheltered accounts, such as 401(k)s and IRAs.
Concern about the European debt crisis is prompting 23 percent of high net worth investors to avoid stocks and mutual funds with global exposures, while more than 18 percent are avoiding fixed-income products from other countries.
High net worth investors are much more likely than less affluent investors to see the European debt crisis as a “major factor” contributing to economic problems at home. Forty percent of the high net worth views the euro zone’s credit crisis as a significant drag on the U.S. economy, compared to 22 percent of individuals with investable assets of less than $100,000.