By Susan Tompor, Detroit Free Press –
Good vibes are good vibes for investors. So why not take a look at two recent surveys regarding how people with money actually feel about their money?
It may, or may not, surprise you that, even after the economic recovery, those with money have more than a few worries, too.
First, some good news: Wealthy investors who saw a rebound in their own fortunes are more optimistic that the U.S. economy is on the rise, according to a PNC survey.
About 28 percent of affluent investors surveyed gave the economy a thumbs-up sign — a significant change from only 10 percent who felt as good a year ago.
More than half reported that their net worth has grown at least 20 percent since 2007, according to PNC’s seventh annual Wealth and Values Survey Investors’ Outlook.
And people sense better days ahead for real estate, too. About 36 percent are optimistic in this survey about the real estate market, compared with only 9 percent who were optimistic in 2011.
What could be even more telling: About 70 percent were pessimistic about real estate in 2011, but only 31 percent expressed such pessimism this year.
The others said they’re neither optimistic nor pessimistic.
Some of this makes a good deal of sense: The Dow Jones industrial average has shot up dramatically and more than doubled since hitting the low of 6,547.05 points on March 9, 2009.
Housing appears to have hit bottom. Based on the latest numbers, housing prices rose 2 percent nationwide in August from a year earlier, the biggest gain since July 2010, according to the S&P/Case-Shiller index of property values in 20 U.S. cities.
Yet “it’s not quite the ‘Everything is fantastic’ story,” said Thom Melcher, executive vice president and managing executive of Hawthorn PNC Family Wealth.
A couple of things are rattling around in people’s minds — mainly the world economy and what some fret about the “new normal.”
Though wealthy people are optimistic, Melcher said, they’re at the same time realistic about the limitations and threats ahead.
“They’re very worried about the global economy,” Melcher said.
While about half of affluent investors say they’re pessimistic about the U.S. economy, about two-thirds are pessimistic about the world economy, according to the PNC survey, which was conducted online in August and September. It involved 1,115 adults with more than $500,000 in investable assets.
Some other surveys show more upbeat attitudes — and some concerns about cash, too.
The Fall 2012 Merrill Edge Report, released by Bank of America, showed that mass affluent couples — consumers with $50,000 to $250,000 in investable assets — are more confident that they will meet their financial goals.
Alok Prasad, head of Merrill Edge, said the latest study marks a definite turning point. Levels of concern in such surveys had been getting worse, not better, for quite some time.
“There was a ray of optimism there worth noting,” Prasad said.
Although most are concerned about their retirement, the Merrill Edge survey data show that the group seems less fearful about their retirement outlook than just a few months ago.
The Merrill Edge survey showed that about 73 percent of the mass affluent fear that their retirement nest egg won’t last throughout their lifetime. It’s not exactly a confidence-builder.
But by contrast, 83 percent of those surveyed said they feared they’d outlive their money, based on an April survey.
It should go without saying, of course, for anyone watching the financial horizon that plenty of younger people feel that they cannot find a strong footing after the Great Recession.
Consumers in the Gen Y group — those 18 to 34 years old — are the most concerned generation when thinking about the impact of the economy on their ability to meet financial goals, according to the Merrill Edge Report.
Prasad said the younger consumers witnessed two financial fallouts within a decade and have a more heightened sense about money troubles. They’re also concerned about college costs, student loans and watching parents worry about their own retirement.
Half of the mass affluent in the Merrill Edge survey have saved less than $250,000 for retirement. As a result, more than half plan to retire later than they had planned a year ago.
Melcher said what he found most interesting about the PNC survey is that five years after the beginnings of the financial meltdown, high-net worth investors say they believe they experienced a change in how they think about money.
About 88 percent say they believe it is “more important than ever to live within my means.” And 3 out of 4 say they’ve developed a greater appreciation for nonmaterial wealth in their lives.
More than half agreed with the statement: “This is the new normal. This is how the future is going to be.”
Thankfully, the future does not look as bleak as it did back in late 2008 or early 2009.
Once again, it looks like you can own stock and make money, if you make some wise choices. And it appears that home prices don’t endlessly spiral down 10 percent or 20 percent a year.
But the new normal? Survey says: It’s packed with a few reasons to toss and turn.
