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How the Wealthy Have Changed Their Investing Strategies

Last update on: Jun 18 2020

The financial crisis of 2008 had a long-term effect on America’s wealthy. Though they’ve recovered nicely from the crisis thanks to government policies that help them the most, many were on edge during the crisis. They realized they had too much debt, too many illiquid assets, and not enough cash. They’ve been reversing those trends since, according to a survey by Spectrum Group.

The survey finds the wealthy increased their savings rates dramatically and are increasing cash balances. Other surveys and research back these conclusions. Apparently the wealthy were scared in 2008 and don’t plan to put themselves at risk again.

According to research from American Express Publishing and Harrison Group, the savings rate of the wealthiest 1 percent soared to 37 percent in the second quarter. That’s up from 34 percent in the second quarter of 2012—and more than three times their savings rate in 2007.

A separate study from Bank of America recently found that 56 percent of millionaires have a “substantial” amount of cash. Only 16 percent of them plan to invest that cash in the next couple of months. And only 40 percent plan to invest it over the next two years.

Some say that cash is money that could be invested in companies, spent on consumer goods or put into job-creating enterprises. Still, stock markets and other financial assets are near all-time highs even with all that cash on the sidelines. And the spending by the wealthy remains fairly strong by most measures.

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