June 1, 2012

Affluent, Millionaire Investors Losing Confidence: Spectrem

Cash holdings rise, investing falls as worries increase over Europe, economy

Affluent/Millionaire Confidence IndexAffluent and millionaire investors are increasingly worried about the fragile state of the economy, according to the latest survey from Spectrem Group.

The Spectrem Affluent Investor Confidence Index (SAICI) fell for the second consecutive month in May, losing 7 points to arrive at -5. SAICI measures the investment confidence and outlook of households with $500,000 or more in net worth. Millionaires aren’t optimistic, either, according to Spectrem’s Millionaire Investor Confidence Index (SMICI), which dropped 5 points to 3. That’s its biggest loss in nearly a year.

The economic woes of Europe are weighing heavily on the affluent. “The ongoing European Zone crisis and its impact on the global economy is the news story that is most affecting their economic outlook,” George H. Walper, Jr., president of Spectrem Group, said in a statement. Unemployment and the domestic political environment also taking a toll, but the situation at home seems not quite as worrying as conditions internationally.

The affluent are sitting out the markets and putting more of their holdings into cash rather than investments. Those choosing the option of cash holdings increased 5 points in May to 26.1, and although those continuing to invest in stocks did edge up 1.8 points to 32.4, all other investment categories fell. Those choosing not to invest at all rose 1.6 points to 36.8, the highest reading in six months.

As might be expected, non-millionaires were more cautious than millionaires, with those choosing not to invest increasing by 1.2 points to 41.6, a three-month high, while investment in cash jumped 11.1 points to 28.8.

The Affluent Household Outlook, a survey of attitudes toward financial factors having an impact on the daily lives of the affluent, fell dramatically after five consecutive months of gains. Though each of the four components remained in positive territory overall, each posted losses over the previous month.

Both millionaire and non-millionaire households were less confident about household income, household assets, company health and the economy. The millionaire outlook was more positive than in non-millionaire households, which posted a reading that almost 20 points lower.

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