March 14, 2011

What Does It Take for Millionaires to Feel Wealthy?

Fidelity Millionaire Outlook survey indicates millionaires’ magic numbers and their current attitudes toward the economy and investing.

Millionaires don’t all “feel wealthy,” according to the “Fidelity Millionaire Outlook” survey, although the majority do. What’s the magic number? Really, there are two.

Although the 1,000-plus millionaires polled for the survey have, on average, $3.5 million to invest (outside of real estate and company retirement accounts), those who “feel wealthy,” 58%, began to feel wealthy once they had median assets of $1.75 million to invest. The 42 % who did not feel wealthy said they would need a median asset level of $7.5 million to feel wealthy

“Our survey reinforces that the feeling of wealth is relative, based on factors such as the current market environment, a person’s age, lifestyle, and so on,” Michael Durbin (left), president, Fidelity Institutional Wealth Services, stated in a release. “Regardless of what the market does, these factors are likely to change and, therefore, millionaires will continue to reassess what it really means to feel wealthy.”

Tax concerns rank high on the list of millionaire investors, according to 64% of participants. Most have, or will, take action to mitigate tax increases, including “discuss it with advisor,” 63%; “use one or more tax-free investments,” 36%; “start or re-evaluate an estate plan,” 25%; or “contribute more to tax deferred or retirement accounts,” 22%.

The group’s outlook on the economy is still glum, but it is improving, and on a relative basis, is much more bullish moving forward than it was last year. Their view on the economy in 2009 was -91%, out of a range of -100 to +100. The millionaires’ view on the “current state of the U.S. economy remains ‘very weak’ at -54,” but turns relatively ebullient at +37 as they get out to the fourth quarter of 2011.

“Although millionaires are inherently optimistic, given their current views of the economy, we were surprised to see millionaires so optimistic about the future,” Durbin said in the release. “Millionaires’ outlook could be seen as a leading indicator of the direction of the economy, especially since the last time we conducted this survey in early 2009, they forecasted improvement in all aspects of the U.S. economy at the beginning of 2010.”

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