Millionaire investors rank risk as their No. 1 investment concern, according to a Spectrem Millionaire Corner study completed in the first quarter of 2013. What else do affluent investors worry about?
More than 90 percent of Millionaire investors indicate they worry about risk – the potential to lose some or all of their original investment in the quest for yields. Every investment – even the most conservative – poses some type of risk, though certain products - such as deposits at federally insured bank -are considered more safe than others.
The appetite for risk is higher among certain types of investors, including those more likely to attribute their wealth to luck, running their own business and being in the right place at the right time. In comparison, only one-third of so-called “plodders” – Millionaire investors who attribute their wealth primarily to hard work, frugality and education – say they’re willing to take on significant risk in order to earn a high return on an investment.
Learn more about how Millionaires will invest in 2013 by clicking here.
Millionaire investors rank a closely related factor – diversity of investments – as their second biggest investment concern. Diversification spreads risk over a variety of asset classes to reduce portfolio volatility, and close to 90 percent of Millionaires incorporate the strategy into their investment decisions. Millionaire investors tend to have a relatively high exposure to individual stocks and stock mutual funds and other traditional investments, such as bonds and cash. To a lesser extent, they invest in international investments and alternative products, including gold and real estate.
Millionaires believe real estate values will continue to improve over the next one-to-two years. Click here to learn more about their real estate market outlook.
More than three-fourths of Millionaire investors also consider the reputation of the companies handling the investments (80 percent) and the tax implications of investments (76 percent). To a lesser extent, they evaluate the track record (72 percent) and social responsibility (31 percent) of investments.