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Wealth Protection Strategies: Millionaires and the Fiscal Cliff

More than half not confident that Congress will reach a bipartisan solution

| BY Donald Liebenson

Millionaire investors are more likely to be more knowledgeable and concerned about the fiscal cliff than less wealthy Affluent households, according to a new Millionaire Corner survey.

Nearly three-quarters (72 percent) of Millionaires said they understand the issues and ramifications of the fiscal cliff compared with 27 percent of households with a net worth of less than $100,000. Similarly, 68.5 percent of the under $100,000 investors said they are not taking any number of actions in response to the issues surrounding the fiscal cliff compared with 42 percent of Millionaires.

People talk about the fiscal cliff, but what are they doing about it? At present, as the deadline gets ever closer, not too much. On the political front, time is running out for lawmakers to reach a bipartisan solution before the end of the year tax cuts and mandatory spending cuts kick in. In an interview last week former Federal Reserve Chairman Alan Greenspan told CNBC he is “quite concerned about the fiscal cliff. Partisan rancor is nothing new, he said, but “what has changed is they don’t talk to each other.”

Current Chairman Ben Bernanke made a similar point in October 2011, when, in the wake of the tumultuous debt ceiling debate, he told Congress, “It’s no way to run a railroad.”

Former Minnesota Governor Tim Pawlenty, newly installed as president and chief executive of the Financial Services Roundtable, released on Thursday an open letter citing that “87 percent of economists surveyed by the National Association for Business Economists believe that uncertainty about fiscal policy is holding back the economy recovery.”

In the letter, he urges President Obama and lawmakers to ”bridge over the fiscal cliff as soon as possible to minimize negative economic consequences (and) address the federal budget deficit in a comprehensive and bipartisan manner in early 2013 to put the U.S. on a path for sustained growth.”

The New York Times reports that “companies are already warning investors about the harsh effects of the fiscal cliff.”

On the home front, Millionaires surveyed by Millionaire Corner, are taking the lead on investment adjustments in response to issues surrounding the fiscal cliff. More than half (52 percent) disagree or strongly disagree that Congress will reach an agreement on the fiscal cliff. More than one-quarter (27 percent) are on the fence about the cliff.

In response, 36 percent of Millionaires (36 percent) said they plan to invest more in cash compared to 28 percent of Affluent investors overall. Similarly, Sixteen percent will up their gold investments vs. 14 percent of Affluent respondents. More millionaires will invest in international products (10 percent vs. 6.5 percent) as well as bonds (21 percent vs. 9 percent).


About the Author

Donald Liebenson

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.