What the Rich Are Doing With Their Money
The following is an article taken from Bankrate.com. The full article can be found here
Experts who work with the wealthy and observe their spending habits say rich folks are sitting on their cash. Just like the rest of us, they’re worried about the future. Suddenly uncomfortable with the nation’s financial volatility, the wealthy are revisiting their investment and savings strategies, says Chris Geczy, director of the Wharton Wealth Management Initiative at the Wharton School in Philadelphia.
“They’re consuming less and saving more,” Geczy says.
Like so many other Americans, “the mass affluent were overextended” in real estate and investments gone sour, he says. Now, they are more likely to invest in fixed-income vehicles.
“They’re still scared of risk,” he says.
Investment professional Nancy Rooney has noticed this fear, too.
“There is a subset who — since September and October — are frozen and so nervous,” says Rooney, managing director and head of the Northeast investment business for private wealth management at J.P. Morgan in New York, which says it serves 51 percent of the Forbes 400 list of U.S. billionaires.
“They’re looking at their principal left and realize, ‘If I lose any more, I’ll jeopardize my quality of life,'” she says.
Here are a few ways the wealthy are saving in the current recession — and lessons average investors can learn from the rich.
Put safety first
Today, many wealthy people are thinking about safety over yield, Geczy says. The wealthy are scouring the Internet, looking for the best rates on CDs, money market accounts and other FDIC-insured options, he says.
“They’re still hugging close to fixed income, Treasury bills and fixed assets,” he says.