Wealthy individuals are in greater control of their investing outcomes because they conduct more research, stay better informed about investing and make more frequent trades, according to a new study.
“The wealthy also tend to have more conversations with experts such as wealth managers," said Lars Long, CEO of Altiant, which specializes in researching the affluent and high net worth individuals.
Altiant’s Views From the Wealthy Investor 2019 study found that high net worth individuals spent 6.3 hours researching investments compared to only 5.6 hours for the emerging affluent with 70% of the wealthy preferring financial advisors as the main source influencing their investment decisions compared to 62% of the emerging wealthy who cited financial news media as their main influential source.
“Even when introducing more speculative investments to portfolios, the heightened knowledge accrued from research allows high net worth individuals to take some calculated risks and better guard against those risks than those with fewer assets,” Long told Newsmax Finance.
While the emerging affluent were classified as Americans with a minimum of $250,000 in assets for the purposes of the study, high net worth individuals are those with more than $1,000,000.
The most popular wealth management companies cited in the study among both the American affluent and the high net worth include JP Morgan, Vanguard, Charles Schwab, Bank of America and Morgan Stanley.
The study further found that wealthy individuals are 6% more likely to embrace risk and invest in speculative vehicles, such as cryptocurrencies, than the emerging affluent, because they are more risk tolerant.
“Risk-tolerant investors are broadly more accepting of potential losses,” Long said. “Risks are generally traded against outperforming the broader market.”
Overall, high net worth individuals are 2% less long-term oriented.
“For more speculative investments like derivative or crypto, some investors might be thinking about long term investment as less than a year,” said Long.
The wealthy are equally invested in publicly traded stocks and mutual funds at 89.4% while 29.8% are invested in crypto-currencies compared to 41.7% in derivatives. Among the emerging affluent, 75.7% invest in mutual funds, 74.3% in stocks, 31.1% in cryptocurrencies and 20.3% in derivatives.
Juliette Fairley is an author, lecturer and TV host based in New York.
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