Exactly how much money does it take to feel rich? A new survey by Fidelity Investments suggests that hitting the old $1 million in assets mark isn't what it used to be.
In its third, annual Millionaire Outlook, released Wednesday, Fidelity found that 46 percent of wealthy Americans who described themselves as millionaires don't feel wealthy, nearly twice as many as last year. Respondents cited stock market losses as the main reason for their guarded outlook. However, those with at least $1.8 million in investable assets were more inclined to classify themselves as "wealthy."
How to get rich, slowly
What's more, millionaires had specific, no-nonsense advise regarding how best to weather the recession: stay the course, stay calm, cut spending, and save more, The Boston Globe reported Wednesday.
Although the results revealed that investors said they've had a difficult year, it also found that many millionaires believed they are nevertheless doing better than the average investor.
"Although most investors hesitate to take action and become gripped by inertia during a market downturn, our research shows that millionaires tend to use this time as an opportunity to reassess and make those tough decisions about their portfolios that can help get their finances back on track," Michael Durbin, president of Fidelity's Institutional Wealth Services said.
Millionaires sense higher taxes ahead
A large majority, 62 percent, of respondents also said they expect to pay higher taxes in the next five years, with more 70 percent saying a capital gains tax increase is "very likely."
The Obama administration is expected to propose raising the top two federal income tax rates, to 39.6 percent and 36 percent, for couples earning more than $250,000 per year (with some small businesses excluded), and also propose increasing the capital gains tax to 20% from 15 percent, when the administration releases its detailed fiscal 2010 budget Thursday.
Fidelity, which manages $1.2 trillion in assets, said the average age of the 1,102 citizens surveyed was 59, with $3.5 million in investable assets, and an annual income of $306,000.
Economic Analysis: Apparently, $1 million doesn't buy what it used to, from an attitudinal standpoint. Clearly, the stock market's decline in 2008, to say the least, reined in investors' view of their financial status, with almost half of millionaire respondents stating they don't feel wealthy. But, as my relatives say in Italy" Che cosa può essere annullata può essere fatto di nuovo ("What can be undone can be done again."). So the sense here is that the non-wealthy feeling will decline as the U.S. economy starts to recover, and the Dow continues its march toward higher levels.