Wealth Report Reveals Investing Secrets of the Rich

According to this year’s annual World Wealth Report from Cap Gemini and Merrill Lynch Wealth Management, there are more millionaires in 2011 than ever before. Even with the “recession” the number of global millionaires jumped 8.9% last year to a total of 10.9 million individuals, with total wealth among that group also bumping up 10% to $42.7 trillion. MarketWatch says the number tops pre-recession wealth totals recorded in 2007. Other notable stats are that America’s rich have been doing just fine during the economic downturn, increasing their total assets by 9%, while Europeans were harder hit, losing their spot as the world’s second richest continent to Asia. Meanwhile, the richest of the rich (30 million plus) saw the most return on their money this year, with total assets up 12%.

Contrary to speculation, and incessant claims via advertisement, gold and commodities are not commonly held in portfolio’s of super-wealthy investors. “Alternative investments” which include commodities, gold and precious metals, and hedge funds, accounted for just 5% of rich people’s assets in the report, down from 10% in 2006.

MarketWatch says, “The core of the rich portfolio is surprisingly conservative. The wealthy have, on average, 43% of their holdings in low-risk assets. That’s 29% bonds and a thumping 14% in cash. They still only have 33% of their money in equities — a slow climb back from the 25% lows seen at the end of 2008. Ominously, while that 33% figure does not seem very high, it nonetheless equals the levels seen just before the crash. And the rich told surveys that they are planning to ramp up their equity holdings pretty substantially this year.”

Real-estate holdings are also (understandably) down among wealthy investors, with property assets accounting for just 15% of wealth (not counting homes). Some notable stats on regional differences, the rich in North American make their biggest investments in equities, with stocks making up 42% of assets, while Asian rich are most heavily tied to real-estate, except for the Japanese, who store 55% of their wealth in bonds and cash. American pride at work too, as the wealthy in our region dumped 76% of their investments into North American assets last year.

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