Every Millionaire has a different approach toward investing their funds, but there are similarities among those investors with more than $1 million in net worth.
Spectrem’s wealth segmentation study Financial Attitudes and Concerns details the investment selection factors of Millionaires with a net worth between $1 million and $5 million, Not Including Primary Residence.
The highest percentage, 91 percent, of Millionaires consider the level of risk associated with investments. The older the investor, the more risk is a consideration. Among Millionaires, 60 percent consider themselves to be moderate risk takers, while 25 percent consider themselves to be aggressive in risk considerations.
The next selection factor is one most advisors are proponents of, and that is diversity of investments. Eighty-nine percent of Millionaires consider the diversity of their investments, again a factor more often for older investors than younger ones. Investors who are advisor assisted or advisor dependent are most likely to consider the diversity of investments (94 percent).
Eighty-two percent of investors consider the reputation of the companies where their investments are made, although the youngest Millionaires, those under the age of 36, are less likely (62 percent) to do so.
Eighty percent consider the tax implications of investments, while 75 percent consider the past track record of investments.
The social responsibility of investments is hardly a consideration at all. Only 29 percent consider that in selecting an investment, although 44 percent of the youngest Millionaires do so, and that is the only factor in which the youngest investors have the greatest interest.
Younger Millionaires are more likely to say they enjoy investing. Sixty-three percent of Millionaires aged 36-44 say they enjoy it, while 59 percent of those under the age of 36 enjoy it. Only 45 percent of Millionaires over the age of 64 say they enjoy investing.
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