Despite market fluctuations, investing in shares remains the main investment vehicle for Czech dollar millionaires. Most often, they seek to invest in company names from the industry in which they understand or do business. This is stated in the thirteenth edition of the J&T Banka Wealth Report 2023, which reflects the attitudes and investment behavior of Czech and Slovak dollar millionaires.
Czech and Slovak dollar millionaires are once again optimistic about the future. It seems that the world has overcome negative influences, and investment instruments are promising growth again. After last year’s recession, they, like the population as a whole, are somewhat more positive about the current economic situation in the country, the survey showed.
However, they are still cautious. More broadly, confidence in business investment is evident. In addition to foreign stocks, dollar millionaires are expecting interesting price growth from companies that are not publicly traded, as well as from corporate bonds, which currently promise interesting price growth and the ability to lock in higher returns over a longer period of time. Improved expectations are also evident in startup investment.
“If you look at the dynamics of expectations regarding the most interesting investment attractiveness in the Czech Republic and Slovakia, the ongoing effect of tightening monetary policy becomes obvious. This was mainly reflected in the rise in corporate bond yields and, especially in the Czech Republic, in the continued interest in time deposits,” comments Petr Sklenar, chief economist at J&T Bank.
Given developments in financial markets, with stock indexes in Europe reaching 15-year highs and US tech stocks enjoying one of their strongest years in history, it is not surprising that dollar millionaires are expecting the most interesting growth in foreign stock prices, Sklenarz said.
Real estate took a backseat in yield expectations for the second year in a row, illustrating the impact of the above-mentioned rise in interest rates. They led to tightening lending standards, and, as a result, the decrease in demand for housing minimized the possibility of rising prices, and therefore the profitability of investments in this area.
“We are therefore seeing a decrease in interest in residential real estate, agricultural land and development land,” Sklenarz further comments.
According to the study, capital market instruments such as stocks, bonds and funds have become the mainstay of the investment portfolio of dollar millionaires, accounting for more than half of the total portfolio. For the first time in history, equities account for a fifth of the portfolio and investment property an equal share.
The ten percent cash dollar millionaires use when an interesting investment opportunity arises.
A testament to the transformation of entrepreneurs into investors is the time that dollar millionaires devote to their portfolios. About half of dollar millionaires monitor their investment portfolio at least once a week, and a fifth even daily. Young dollar millionaires are monitoring their portfolio even more often due to the greater exposure to stock investments.
Growth in value and provision of annuity
The main goal of wealth management is, first of all, to increase the value of assets, as stated by 40% of Czech dollar millionaires. Other goals are to provide annuities and preserve the purchasing power of wealth.
Equally half of dollar millionaires say they enjoy the world of investing and stocks, and it’s even something of a hobby. However, they are well aware that detailed knowledge of the market takes a lot of time. Therefore, they often resort to the services of professionals to manage their portfolios.
However, gaining the trust of dollar millionaires is not so easy. “If you just give advice and don’t invest yourself, you have no chance. In short, you must be an investor and have personal interests and your own money, otherwise you will not partner with dollar millionaires, adds Sklenarz. On the professional front, there has also been some disillusionment with dollar millionaires from investment “influencers” on social media.
About the study
The survey was conducted from August to September 2023 in partnership with research agency Perfect Crowd. The purpose of the study was to study the investment behavior and lifestyle of Czech and Slovak dollar millionaires, that is, people whose available funds amount to at least one million US dollars.
The study involved 331 respondents among dollar millionaires (212 Czechs and 119 Slovaks). Data collection was carried out using online questionnaires. The qualitative data was supplemented by in-depth interviews with 22 respondents (14 in the Czech Republic, 8 in Slovakia).
Who is a Czech dollar millionaire?
Mainly economically active male, 56 years old on average. These are predominantly entrepreneurs, executives or professionals, and only about 12 percent of them are retirees. There is a noticeable emergence of younger dollar millionaires who are successors to entrepreneurs after retirement or successful startups. Despite the slight increase in the number of successful women, the world of dollar millionaires remains male. Stocks remain his primary investment vehicle, and he invests primarily in industries in which he has knowledge or business. He still considers cryptocurrencies a risky asset, from which he does not expect an increase in rate. He highlights India, the USA and Southeast Asia as investment prospects. On the contrary, he would like to live in Southern or Western Europe. Therefore, he does not expect Europe to grow, but considers it a good place to live. He is optimistic about the development of his wealth and expects it to increase in the coming year, most often by 2%-9%. In the future, his wealth will consist mainly of investments.
2023-12-26 15:00:00
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