Wednesday, March 11, 2009
Not more than a couple years ago, back when both real estate and stocks were still booming, anyone with a decent size retirement account and a little investment property could count themselves as part of the seven figure club. Of course, the year 2008 changed all that and new details of our vanishing wealth are provided in this CNN/Money report:
Millions are no longer millionairesDeclines in "asset classes available to the nation's wealthiest investors" were blamed for the sudden change in fortune, apparently too few in the upper crust considering cash or gold worthy of their consideration, to their detriment.
The financial crisis has weighed heavily on American households, and millionaires are no exception, according to a report released Wednesday.
The number of American households with a net worth of $1 million or more, excluding the value of their primary residence, fell 27% to 6.7 million in 2008 from an all-time high of 9.2 million the year before, according to a report from market research firm Spectrem Group.
Affluent households, defined as those with a net worth of $500,000 or more, declined 28% to 11.3 million from 15.7 million.
Even the very rich have not been immune. Households worth $5 million or more, excluding primary residence, fell 28% to 840,000 last year from 1.16 million households in 2007.
Well, it looks like some of them are looking at cash now.
A majority of respondents said they are shifting capital into safer assets such as cash. But about 30% of those surveyed, mostly younger households, indicated that they are still buying stocks.Wow.
The report did not bode well for financial advisers. Only 36% of those surveyed said they have a satisfactory relationship with their primary financial adviser. That's down from 85% last year.
The double-whammy of plunging home values and plunging stock prices has really put a dent in the business of dispensing financial advice, or so it seems.
I remember a conversation with a co-worker back around 2005 or 2006 who boasted of having hired a financial adviser to manage all their new-found (housing) wealth. His wife had just been laid off and had embarked on a new career in real estate so, naturally, a deeper foray into investment property was the natural way to spend all that home equity, along with a more aggressive stock portfolio.
Sometimes I wonder how these people have fared, but not very often.
Hopefully, this millionaire didn't have all his money in Vegas real estate and financial stocks.
Seriously, this is what comes up when you do a Google image search on millionaire.