Investors are traveling diverging paths through the financial landscape of post-Recession America. Confident investors believe it’s time to take money out of savings and begin buying stocks again, while battle-scarred investors are maintaining the defensive stances they adopted during the Recession.
Not surprisingly, the most sanguine investors tend to be millionaires, who attribute their success to hard work, education and smart investing, according to Spectrem Group research. More than half feel it’s time to reenter the stock market and, as a group, express fewer fears about wealth and retirement. The confidence of this self-made group is not widely shared by Main Street Americans, who are likely to feel it’s more important to protect, rather than grow their investments.
Millionaires are shifting away from the conservative attitudes they held during the Recession. A year ago, 27 percent of high net worth investors described themselves as conservative, while 57 percent called themselves moderate. In a December survey, 11 percent said they were conservative, while 67 percent said they were moderate. At the same time, the percentage calling themselves aggressive – seeking high returns and willing to put a significant percentage of their portfolio at risk – grew from 13 percent to 20 percent. (Spectrem defines high net worth investors as having $5 million to $25 million, not including their primary residence.)
Non-millionaire investors are much less likely to risk their money. More than half – 55 percent – say it’s more important to protect their wealth, than grow their investments. As a group, non-millionaire investors are more likely to invest in cash than any other investment this year. Less than 25 percent are likely to buy stocks in 2011, and even fewer are interested in bonds, international investments, real estate and alternatives, such as gold.
These conservative investment attitudes reflect the prevailing personal concerns of the mass affluent. Nearly three-fourths worry about maintaining their current financial position and more than two-thirds worry about setting aside enough money for retirement. Health concerns and the financial well being of children and grandchildren also preoccupy the mass affluent, defined as having a net worth of $100,000 to $1 million excluding their primary residence.
One-third say they will have trouble maintaining their current standard of living, and 31 percent will have to delay their retirement because of the Recession. About 20 percent have had to sell stocks and property to maintain their standard of living during the Recession, and an equal number have made early withdrawals from retirement funds.