Ever wonder what the investment buying sentiment is among affluent households? Are they constantly increasing their net portfolios? Somebody actually decided to find out.
According to the Phoenix Affluent Marketing Service, which is this country's largest continuously fielded syndicated survey of affluent households in the U.S., some 42 percent of mass affluent households plan to make net increases to their portfolio in the next three months. This is an increase of 38 percent over the past year.
So, where's the money going?
Retirement accounts, says Phoenix, are where 70 percent are likely to increase positions followed by 62 percent in deposit accounts. Mutual funds account for 46 percent with stocks at 42 percent.
Interestingly enough, 53 percent of mass affluent consumers plan to make no net changes to their portfolios and only four percent say they are likely to make net decreases in the next three months.
What does this mean? David Thompson, vice president, affluent practice, at Phoenix Marketing International, says that affluent consumers are generally a highly risk averse group but are showing signs of confidence in the economy as they move their money back into the stock market. "This continued momentum is an excellent opportunity for financial planners to expand and diversify their customers' portfolios."
Incidentally, Phoenix tracks the percentage of affluent and high net worth consumers who anticipate making increases to various asset class categories. These include stocks, mutual funds, fixed income, real estate, business investments, and retirement accounts. The data is weighted to be representative of affluent households nationally. Translated, that means a minimum of $250,0000 in investable assets and/or $150,000 in household income.
The survey took in 1,100 affluent consumers regarding their plans to make changes to their investment portfolios over the next there months.
What's most fascinating is that there are some 23.6 million affluent households in the U.S., an increase of 19 percent over 2004. Affluent is defined as those having at least $250,000 in investable assets or $150,000 in income. The most robust growth last year occurred among so-called "mass affluent" households, those with between $250,000 and less than $1 million in investable assets. That market was up by 30 percent from the prior year.
Thompson notes, "Often, in the mainstream affluent market, there is a lag in growth or decline, as the effect of the stock market slowly moves households into or out of various wealth categories. We usually see more immediate gains or losses among higher net worth households, whose portfolios often have a higher risk profile and are therefore more reflexive of the moves of the market."
By the way, the number of millionaire households increased by 35 percent from mid-year 2003 to mid-year 2004. And it continues to grow.
