This economic downturn has been a significant and life altering experience for many Americans, and the impact this crisis may have on households across the country can probably be classified as stunning.

In November 2008 Spectrem Group surveyed individuals with over $1 million in wealth in focus groups in five cities: New York, Palm Beach, Seattle, Los Angeles and Chicago. Additionally, a quantitative online study was conducted with over 750 Millionaires. The findings were dramatic. Even Millionaires are feeling some drastic changes in their daily lives and certainly their long-term retirement plans.

For 80% of Millionaires, this is the worst financial crisis they have ever experienced. Over 49% are changing their spending habits in the short term. Approximately 42% of investors have already made changes to their investments and another 39% anticipate changing their investments in the next few months. Thirty percent are moving into “safe” vehicles like cash. Despite all of that, 17% of investors still consider real estate to be a good investment, particularly younger investors. Thirty-four percent of investors 25-45 are investing in real estate.

Of course, many of the wealthy already have significant investments in real estate and see this as a perfect time to invest more. They see it as a haven in many ways despite the ups and downs the real estate market has taken over the last 18 months. One investor participating in the focus groups was quoted as saying, “What I’m doing now is I’m buying property. I’m land banking. Instead of putting money in the bank, I’m buying land.” Thirty-six percent of younger investors are currently buying equities. Younger investors are also looking to invest in Alternatives (probably with a hope of quickly regaining their losses). Younger people clearly see this crisis as an opportunity to invest more across all asset classes.

While investors acknowledge losses in the value of their principal residence, they perceive that they have not lost as much value in their investment real estate. Baby Boomers, along with their older counterparts, are the most likely to be moving their assets into cash investments. The challenge with the investment changes these investors are making is that they will not spur asset growth nor will they help investors recover some of their losses. While investors wait for the market to rebound, overcoming their own fears will be one of the greatest obstacles to economic recovery.

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