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Millionaires say it’s the most unpredictable time in history
- 82% of millionaires in seven different markets around the world think the current period is the “most unpredictable” ever
- Wealthy are distracted by short-term risk and suffering from information overload, study finds
- Over 80% think elections are decided by emotions rather than facts and say the financial system is a cause of global uncertainty
- But despite this 51% expect an improvement in their own financial position over the next 12 months while just 13% expect it to deteriorate. Most are confident that they can find safe places to invest their money.
- A total of 2,842 millionaires were interviewed in the UK, Italy, Switzerland, Japan, Hong Kong, Singapore and Mexico
Zurich, 17 May 2017 – A major study of millionaires in seven different markets has provided a detailed view of the attitudes, fears and hopes of wealthy people around the world.
UBS Wealth Management asked nearly 3,000 millionaires* for their views on political and economic uncertainty, after a rollercoaster year that included the election of President Trump, the Brexit vote in the UK, and rising tensions over North Korea.
A large majority (82%) of this hard-to-reach group think this is the most unpredictable period in the history of the world. Two-thirds (68%) are suffer from information overload as they make decisions to navigate this uncertainty. Nearly three quarters (72%) admit short-term distractions and unforeseen events keep getting in the way of their financial plans.
Emotions, say most millionaires, are now more important than objective facts in shaping public opinion. Over 70% believe elected governments can only respond to short-term dangers.
Jürg Zeltner, President, UBS Wealth Management, said: Jürg Zeltner, President, UBS Wealth Management, said: “Some people would argue the world is easier to predict than ever. The worlds wealthy clearly feel the opposite. After a year of uncertain events and high profile shocks, most believe we live in a very unpredictable age. Political, economic, societal and financial risks are all prominent in people’s minds.
In response, we see evidence of short-termism gaining hold, people reacting to each event as uncertainty grows. Investing on your own doorstep and holding onto cash can feel safer, even as it erodes your wealth in real terms. Neither approach is likely to work well in the long-term. In an unpredictable world, it remains best to look to the long-term, focus on your goals and invest in a balanced portfolio across a range of assets and locations.”
A significant minority do think new technologies like Artificial Intelligence (43%) and Big Data (46%) make the world more predictable. However, 86% regard uncertain events as a risk to their wealth, double the number who see an opportunity.
Yet despite all this, the number of millionaires who are optimistic about their and the world’s future far outweighs those who think otherwise. According to the UBS Confidence Index, half (49%) of millionaires feel optimistic and confident about the future, compared to just 16% who are pessimistic (The remainder did not anticipate a change).
However, the world’s wealthy are consistently more optimistic about their own future prospects than they are for the wider economy. In fact, 77% say that they are confident in their own ability to assess financial risks.
Part of the reason for that confidence is the belief that they can find safe places to invest their money in an uncertain environment. 73% say the domestic market offers security for their money while 75% the same about cash, despite the risks of holding this asset.
UBS Wealth Management recommends three tactics to help deal with unpredictability:
- Focus on the long term. Avoid responding to short-term events or distractions. Cutting through this noise has never mattered more, because there has never been so much of it. Think about your long-term goals, create a financial plan and stick to it.
- Maintain a diversified portfolio. Exposure to a broad range of assets and geographies is essential. It helps to avoid the risks of domestic biases. Adding alternative investments also limits shocks from domestic and global uncertainty.
- Be wary of overestimating the safety of cash. Cash may seem to be attractive, especially in an unpredictable world. But inflation erodes its value, meaning that cash assets can damage your financial health in the long term.
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