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Millionaires Are Now Pessimists of the Financial Future

And who’s going to sell his next Hamptons estate?

Fidelity Institutional Wealth Services recently released its The Fidelity Millionaire Outlook Series. The survey is about U.S. households with investable assets of at least $1 million, excluding workplace retirement accounts and any real estate holdings. The research analyzes millionaires’ attitudes and behaviors on a variety of investing topics, including financial concerns, economic outlook, and use of financial advisors.

And the facts are not that surprising to say the least. Although the white paper available for download consists of the fifth volume only (the first four can be ordered), we’ve discovered that CNNMoney.com has revealed some of the key findings:

Forty-six percent do not feel wealthy anymore, rising from 19 percent last year.

Seventy-seven percent say the current crisis is the worst that they’ve experienced.

Seventy-two percent are expecting higher capital gains taxes.

Sixty-seven percent are expecting a higher dividend rate.

Sixty-two percent are expecting a higher federal income tax rate.

The report explains, “Fidelity blamed the drop on the corresponding plunge in wealth, with an average 19% reduction in household income and investable assets, and a 28% plunge in real estate holdings.”

Well what can we say? Even the rich have their bad days too. And if a middle-income employee with three kids is trying to make far ends meet these days, should we expect these millionaires to be suffering the same? Maybe, but in a different degree. That’s because whenever a millionaire has seen his real estate property values slide in a freefall, he can always substitute his losses with his other earnings. He may be sulking with his Florida mansion’s very low appraised value but that does not compare to a family on the verge of losing their only home to foreclosure.

And how is their gloomy outlook in the economy particularly in the property market going to affect non-millionaires? By restricting their real estate investments for fear of substantial losses, the market would be hampered considerably – less demand for large loans would mean reduction in available credit that banks can use to finance their activities. And that could leave a lot of people at the mercy of their companies when deciding to cut workforce or reduce salaries because of a slowdown in their operations.

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