Thursday, July 14, 2005

America's Wealthy are Pulling Out of Real Estate

According to this article, the wealthy, who should be wise in the ways of making money, are taking their money out of real estate.
"What are wealthy folks doing with their money nowadays? They are: a) losing it in hedge funds, b) cutting back on real estate investments, c) eating it."
"While many less well-to-do folks are deciding that their best investment is an expensive new home with a super-sized, interest-only mortgage, the wealthiest U.S. folks are retreating from the real estate market. The most recent World Wealth Report from Capgemini and Merrill Lynch came out in mid-June with a breakdown of where their portfolios are invested."

"For high-net-worth investors (those with assets of at least $1 million), equities were still the No. 1 preference for their portfolios. They put 34 percent in equities, 27 percent in fixed income investments (bonds), 12 percent in cash, and 14 percent in private equity. None of these numbers changed much from the year before.

But there was one significant change: investments in real estate shifted down, from 17 percent of portfolios to 13 percent. As one of Merrill Lynch's executives put it: 'High-net-worth investors and their advisors try to anticipate rather than follow market trends and get ahead of the curve in their investing strategies.'"

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