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Affluent Investors Lean Toward Cash, Away From Stocks

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Affluent Investors Lean Toward Cash, Away From Stocks

Written by: Catherine McBreen | Spectrem Group

The enthusiasm which marked investing intentions in September receded slightly in October, as investors once again expressed plans to invest in cash products for the immediate future.

The Spectrem Investor Confidence Indices in October took a slight turn toward the negative after recording a huge leap upward in September. Both Millionaires and non-Millionaires expressed intentions to pull away a bit from stock and stock mutual funds, and invest instead in bonds and cash products. At the same time, there was a decrease among both segments in those not increasing their investment allocations in the coming month, which means investors want to stay involved in a market that remains high.

Affluent investors prefer cash at this point

Here is a comparison of investing intentions as reported in the Spectrem Investor Confidence Indices based on specific segmentation:

Millionaires vs. Non-Millionaires

Millionaires and non-Millionaires do not always agree on investment intentions for the components of the Spectrem Investor Confidence Indices, but in October, they were in lockstep throughout. There was a corresponding drop in stock and stock mutual fund investing, an increase in individual bond and cash investing, and a matching decrease in those not investing in the immediate future. This level of agreement seems to indicate an interest in investing in the fall months with a concern over investing in individual stocks or stock mutual funds.

Investing interest in individual stocks among Millionaires dropped from 31.8 percent to 29.1 percent, and among non-Millionaires it fell from 20.7 percent to 19.5 percent. The decrease in stock mutual fund investing was less than 1 percent in both segments.

Meanwhile, cash investing jumped by more than 5 percent among both Millionaires and non-Millionaires, reaching 32.3 percent among Millionaires and above 20 percent (22.0 percent) among non-Millionaires.

Those not investing, the investors who state plans to maintain or decrease their investment allocations in the coming month, fell among both segments, and dropped by more than 4 percent among Millionaires to 30.7 percent. That marks an intention to increase involvement, but only with an increase in safety products.

Men vs. Women

The withdrawal from stock and stock investing among all investors is apparently fully from the female perspective. Women dropped their investment intentions in both stock and stock mutual funds, and the decrease in mutual funds was by almost 10 percent, 29.7 percent in September to 20.4 percent in October. Men, meanwhile, reported a slight increase in their stock mutual fund investing. In fact, the only component in which men dropped their investing intentions was in bond mutual funds.

Both men and women reported a decrease in those not investing, to similar percentages. Among men, it fell from 38.3 percent to 34.9 percent, and among females, it fell from 46.5 percent to 43.9 percent.

In terms of overall confidence, the indices rose slightly among females and fell a bit more dramatically among males.

Republican vs. Democrat

Neither Republicans nor Democrats reported an increased interest in stock or stock mutual fund investing in October. The decrease in interest in stock mutual fund investing among Republicans was large, from 40.21 percent to 32.98 percent.

Individual bond investing rose among investors of both parties, although bond mutual fund investing fell deeply among Democrats, from 16.00 percent to 7.46 percent.

Notably, those not investing in the coming month rose among Republicans to 36.17 percent. That increase was matched among investors who are still working (see below).

The overall indices dropped for Republicans, and among Millionaires it dropped by 12 points, from 13 to 1. Among Democrats, the overall indices remained static.  Among Millionaires, the difference between the Republican index and the Democrat index was low, from a rating of 1 for Millionaires to -4 among Democrats.

Working vs. Retired

There is no question working and retired investors have different aims in their investing intentions. But, in October those differences were heightened to a degree rarely seen.

In terms of stock and stock mutual fund investing, retired investors increased their interest, and in stock mutual fund investing, the increase was by more than 7 percent, from 17.3 percent to 24.7 percent. Meanwhile, interest in stock and stock mutual fund investing feel among working investors, with an 8 percent decrease in interest in stock mutual fund matching the increase among retired investors.

In terms of those not increasing her investment allocations for the coming month, the percentage actually rose among working investors to 33.1 percent, the highest percentage of the year. Among retired investors, the percentage of those not increasing investments dropped by more than 15 percent, to 46.1 percent.

The overall index for retired investors rose among both affluent and Millionaire investors, reaching 5 among Millionaires and -9 among affluent retired investors, the highest rating in five months.

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