Millionaires see sturdy market beneficial properties in 2021
America’s millionaires are betting on a strong stock market for the next year. According to the CNBC Millionaire Survey, many are expecting double-digit growth.
Seven in ten expect the S&P 500 to grow at least 5% over the next year, and nearly a third of respondents expect at least 10% growth according to a survey of households with $ 1 million or more of investable wealth.
The S&P 500 is up nearly 14% this year.
Although the market is near or at record highs, the survey shows that most millionaires plan to hold or add to their inventory levels for the next year. Only 9% plan to reduce their shareholding. This upward move in the face of the Covid pandemic and economic uncertainty could provide a strong tailwind for the market as millionaires own more than 85% of the individually held stocks.
“I expected more of them to make plans to get out of the market at these levels,” said George Walper, president of Spectrem Group, a research and advisory firm. “You have clearly adapted to the volatility.”
Half of the millionaires surveyed expect their personal wealth to increase over the next year, while 40% expect it to stay the same.
Millionaires’ views of the greatest financial risks in the coming year depend more on political party affiliation than on wealth levels. Republican millionaires cited taxes as the biggest risk to their wealth in 2021, while Democratic millionaires cited the virus as the biggest risk.
Less than a third of millionaires say the economy will be weaker over the next year, and most say interest rates will stay the same, which will help stocks too. Their bright outlook is another sign of a K-shape recovery, with middle and under-earners and small businesses still struggling, while higher-income workers and investors continue to see improvements.
Stocks are the most popular asset class for millionaires over the next year. 44% plan to add stocks. When asked which market sectors they want to add more money to in 2021, technology came first, followed by healthcare and finance.
“Given everything that’s going on around us, they’re optimistic,” said Walper. “It’s the vaccine and the hope of reopening.”
The Spectrem Group conducted the survey for CNBC in November. 750 participants with investable assets of $ 1 million or more were surveyed.