Personal definitions of rich and wealthy are subjective, especially across age levels. Millionaire Corner research finds
That’s the benchmark figure a majority of investors would need to accrue before they felt they were wealthy, according to a new UBS report.
Half of the investors surveyed said they define wealth as having no financial constraints. By that definition, 60 percent of those with $5 million in assets said they feel wealthy, while only 28 percent of those with $1 million responded similarly. But while there is a gap between these investors in who does or does not feel wealthy, there is little difference between these groups in confidence that they will achieve their financial goals, the study found (64 percent of those with $5 million and 62 percent of those with $1 million).
Bolstering their confidence and feelings of security is cash. In response to the significant losses they endure in the 2008 economic collapse, these investors have prioritized building up their cash reserves. For the past three years, surveyed investors have maintained an average of around 20 percent of their assets in cash.
In the recent survey of affluent investors conducted by Spectrem’s Millionaire Corner as to how they intend to invest in the short-term, Cash posted the biggest month-to-month increase (7.3 points to 26,3) for the highest reading since last December when there was uncertainty over whether lawmakers would reach a bipartisan solution to the fiscal cliff. This commitment to cash indicates continued wariness over the recent stock market volatility over the past month.
Nearly all of the investors surveyed by UBS said that it is important to have enough cash on hand for emergencies. Nine-in-ten also said that cash holdings give them peace of mind.
Perhaps a reason why a large percentage of millionaires do not feel wealthy is because of additional financial pressures as a result of the recession. Four-in-five of investors surveyed by UBS said they provide financial support for adult children or parents, with one-in-five sharing a home. More than half (54 percent) pay for minor expenses while 42 percent help to fund education.
Affluent investors recently surveyed by Spectrem’s Millionaire Corner expressed a lower benchmark for the minimum annual household income it would take for them to consider themselves wealthy. Of the 1,200 affluent investors we surveyed, the highest percentage (27 percent) of our surveyed investors said the proverbial “1 million dollars.” Eighteen percent said $2 million, while 16 percent said $5 million.
Personal definitions of rich and wealthy are subjective, especially across age levels. Surveyed investors under 40 were significantly more likely than their older counterparts to consider $1 million to be the minimum wealth level to be considered rich. Forty-five percent cited this figure, compared with 22 percent of investors older than 60. Conversely, a higher percentage of oldest investors considers $5 million as the minimum benchmark to be considered wealthy vs. 11 percent of investors under 40.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.