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Affluent Households Pull Out of Neutral

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CHICAGO (–The Spectrem Group said that the investment outlook traced by its “affluent index” (based on a survey of households with US$500,000 or more in assets) gained four points in January, putting it in mildly bullish territory.

On a scale ranging from positive 30 to negative 30, neutral terrain ranges from positive 10 to negative 10. The affluent investor index was in neutral for most of 2005. After a historic low of minus 6 in October 2005, it was at plus 4 in November 2005, up to 8 in December, and broke through out of neutrality to 12 in January 2006.

Likewise, the millionaire index, which measures the mood of households with US$1,000,000 or more in investable assets, has risen in each of the last three months, reaching 22 in the latest survey, its highest level since June 2004. Its all-time high was 25, in April 2004.

“Affluent investors have finally returned to a mildly bullish outlook, after spending almost all of last year languishing in neutral territory,” said George H. Walper Jr., president of Spectrem Group, in a statement. “While this is certainly positive news on its face, it is stronger still given the impressive surge our affluent index has made since late last year.”

Responding to an open-ended question about the biggest threat to household financial goals, the largest group of the affluent cited the economy (13%), then stock market conditions (12%), then household cash flow (9%). The view of the narrower millionaire group was similar. Its members cited the economy (13%), then stock market conditions (10%), then low investment returns (8%) and retirement (8%).

Interestingly, petroleum prices have dropped out of the worry list. Eight percent of the affluent in September 2005 and 6% of the millionaires that month mentioned fuel costs. In December, 4% of the affluent and 3% of the millionaires did so. In January, nobody in either group seems to have brought up that issue.

Spectrem Group is a strategic consulting firm specializing in the affluent and retirement markets, integrating proprietary research with expertise in building business, marketing, and acquisition strategies.

Contact Bob Keane with questions or comments at [email protected].


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