Bank of America recently conducted a survey of about 1,000 "mass affluent" investors. The results are found in its Merrill Edge Report: November 2011.
The mass affluent are defined as people who have $50,000 to $250,000 in investable assets. These people are not rich. In fact, they are solidly in the middle class. They are extremely important because there are so many of them and they form the backbone of the investing public. An estimated 28 million households fall into this category. That's about a quarter of total U.S. households.
Some of the findings are encouraging. For example, about a quarter of those surveyed said their financial situation is better than it was a year ago because they are spending less, paying bills on time, and sticking with a budget. Other results, however, are worrisome. More than a quarter of the respondents said they are dipping into savings to meet short-term needs and they are neglecting their long-term goals. Almost half think they will retire later than they had hoped just a year ago, and more than 40% have become more conservative with their investments.
Interestingly, these people are taking less risk with their investments at a time when the Federal Reserve is trying to encourage risk taking. These people would rather hold cash, which pays little or no interest, than take the risk of losing money in the stock market. I discussed some of this with Tracy Byrnes today on Fox Business.
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