Now that the market is once again dipping precipitously, what is it that investors wish they had done differently prior to the financial crisis of 2008 and 2009? Have they changed their habits since that time?
Dependent upon wealth segment, the behaviors that investors wish they had changed varied somewhat. Mass Affluent investors, those with $100,000 to $1,000,000 of net worth wish they had save more at 45 percent. Millionaires, those with $1 million to $5 million of net worth also wish they had saved more at 23 percent. Those with more than $5 million of net worth, also known as the Ultra High Net Worth or UHNW, wish they had invested more conservatively. All of these findings are based upon research with wealthy households conducted by Spectrem Group with wealthy households on a monthly basis.
Twenty percent of the Mass Affluent wished they had taken on less debt prior to the Recession and 21 percent wish they had invested more conservatively. Research with the Mass Affluent conducted by Spectrem Group since that time indicates that they have invested more conservatively and taken on less debt. In fact, many of the Mass Affluent missed the market upturn in recent years due to their conservative investment philosophy. Only just recently have the Mass Affluent began to invest more aggressively. It will be interesting to see if the current market downturn impacts their newly-acquired confidence.
Millionaires had wished they had invested more conservatively and saved more. Overall, Millionaires were initially cautious regarding investments coming out of the Recession but quickly became more aggressive as the market continued to climb.
While the UHNW indicated that they wished they had invested more conservatively prior to the financial crisis, actions since that time indicate that their investment risk tolerance changed quickly. The UHNW are moderately aggressive in their investment approach. Because of their advanced average age, however, there is a core group of UHNW investors who remain relatively conservative in the investment risk tolerance.
Millionaires and UHNW investors have expressed confidence in the market going into 2014. While the current downturn is likely to cause some wariness, it is unlikely that there will be massive withdrawals. Mass Affluent households, however, may be more likely to remain on the sidelines until the currently volatility once again diminishes.
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