What a great countryWritten by Matt Sussman | | firstname.lastname@example.org
Why is there so much hatin’ goin’ on out there? Why is the group so many long to be a member of so reviled? I’m talking about the rich.
You saw the recent headlines. ”U.S. ‘very rich’ list grows at fastest pace in a decade.” It is true the number of the very rich grew substantially last year. In a study done by the Spectrem Group, we’re told it was the fastest pace in 10 years. A new record of 930,000 households, with investable assets of at least $5 million not counting the family shack, sits on top of the world. An astounding 8.3 million are now members of the millionaire’s club.
Is this a bad thing? I know there are many haters out there who loathe hearing such numbers, people who can’t believe there are so many wealthy crooks still walking free. Proof the Bush tax cuts worked for his already wealthy friends, right? The rich stealing from the poor and middle class again. Actually, a company director attributed the increase in wealth to the use of alternative investments and an increase in the use of international markets.
Spectrem’s analysis discovered that $130 billion was put into international mutual funds by U.S. investors last year. This is important because it outpaced investment in domestic mutual funds by more than 3 to 1. A great number of foreign markets outperformed the U.S. last year. What did these folks know that others didn’t? I’m not sure exactly, but maybe the fact that the very rich also reported higher satisfaction levels with their financial advisers tells us something.
In the go-go 1990s, when all that mattered was domestic growth mutual funds, many people wondered, ”Why am I using a financial adviser? I can do this well myself.” Too many in the financial business failed to offer real value to their clients, so they tried it on their own. The Spectrem report shows a significant change; the very rich have been shifting assets back to full-service advisers.
It was the affluent who were hit the hardest during the market downturn that began in the spring of 2000. These fine upper-middle class folks have high incomes but have not yet reached millionaire status. Earning a million does not make you a millionaire. Having a million you don’t need to pay for general living expenses does.
Should achieving a degree of financial wealth really be a bad thing? The growth of the list is due to new households who have earned their money through hard work. These new additions are small business owners and professionals who first invested in themselves and then saved some of their profits and income on a regular basis. Only a small number were added because a family fortune was handed down. This means that you, too, can one day become a member of this list if you desire.
Direct investment in the stock market is not a zero-sum game. One person’s win does not mean there was a loser at the other end. Someone could have made a purchase of shares of one of America’s great companies as an investment to help pay for college for a child. When needed to pay the bill, they would place a sell order, hopefully for a handsome gain. Someone bid to buy those shares that were sold. Did that person get ripped off? Not at all; the sell in this example had nothing to do with the material well-being of the company. The new investor still has the potential for future gains. The sellers, of course, benefited by achieving the goal of helping their son or daughter get a higher education.
Accruing vast sums of money is not the only measure of success. They say money can’t buy happiness. True enough, but I’d rather be rich and unhappy than poor and unhappy. Using a qualified financial adviser can benefit those of us in the middle class as much as the wealthy; maybe more.
Troy Neff is the managing director of Advanced Retirement Solutions in Perrysburg. He hosts ”The Troy Neff Show” heard on WCWA 1230 AM weekday mornings at 6-9 a.m. Send e-mails to Troy@TroyNeff.com.