Affluent Investors Have Increased Confidence About Investment Climate

The Citi Smith Barney Working Wealth Investor Poll for May indicates a u-turn in affluent investors’ confidence.
The number of wealthy investors saying they believe the investment climate is better today than it was a year ago fell sharply after the start of the late-February market volatility and remained at around 35%, according to a Citi Smith Barney news release. However, over the last month the most negative assessments improved. Only 22% of respondents said they see things as being worse than a year ago.
The share of investors saying the investment climate will be good over the next six months rose to 58%, from 49% last month, the release said. Additionally, seven in ten respondents said they are optimistic their investment portfolio will meet or exceed their expectations in the near future.
Nearly two-thirds of those polled said now is a good time to invest in stocks or other equity-based investments, an increase of about five percentage points from last month. The optimism was most noticeable among millionaire investors; more than three-quarters of that group said now is a good time to invest in stocks.
Other results of the survey included:
  • Nearly two-thirds of wealthy investors characterize the economy as experiencing either a slow down or a recession; still, only 29% believe things are in an expansion or a recovery.
  • The rising stock market is leading nearly four in ten investors to anticipate that stock market performance will be higher a year from now. This represents a significant increase from 28% of investors last month.
  • Two-thirds believe that the war in Iraq will have a negative impact on the investment climate.
  • The continuing rise in gas prices is also an issue for wealthy investors. More than eight in ten believe that energy prices will be higher in the coming months, the highest score for 2007. Three out of four believe that energy costs will have a negative impact on the overall investment climate in the next six months.
Greenwald & Associates and Synovate conducted the poll of investors who have at least $100,000 in financial assets (excluding real estate and employer retirement plans) – a definition that describes approximately 25% of all U.S. households. Investors with $1 million or more represent 47% of the interviews.

Cost is Barrier to Micro-Businesses Offering Retirement Plans

Nearly two-thirds (62%) of micro-business owners say the cost of administering and contributing to a retirement plan is the biggest hurdle to offering them.
A survey of more than 3,000 employers with 10 or fewer employees found that about 80% of micro-businesses do not offer retirement plans to their owners or retirees, and only 5% of micro-businesses say they plan to offer a retirement plan in the next year, according to the survey by the National Association for the Self-Employed (NASE).
Of the respondents that do offer retirement plans, the most common plan type is a simplified employee pension plan (SEP). Although business owners said that finding information on retirement options is easy, only 40% are familiar with and understand the options available.
Further, more than half of the micro-business owners that offer retirement plans handle the administrative legwork themselves. Most of the plans (63.4%) cover only the owner, but nearly one in three owners excludes themselves from the retirement coverage, opting instead to provide employee-only coverage, NASE said.
More the one third of micro-business owners are not saving for retirement at all, and one in five owners of these businesses are not sure when they will have enough to retire. More than 90% of those with a retirement plan through their business are presently saving for their own retirement, versus only 57% of those without a retirement savings plan through their business, the survey found. Nearly 13% have no savings at all and 26% have less than $50,000 saved. However, nearly 29% believe they will need at least $1 million in savings before they can retire.
Over three-quarters of micro-business owners are relying on the federal government as their primary source for financing retirement, with Social Security being the most frequently mentioned income source.

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