Rich people are hoarding cash, and wealth managers are getting frustrated

Rich people are hoarding cash, and wealth managers are getting frustrated

https://www.ft.com/content/7ebfa850-bf2d-11e9-9381-78bab8a70848

"High-net worth individuals (HNWIs) — people with at least $1m in investable assets — are increasingly shunning equities. In the first quarter of this year, HNWIs held nearly 28 per cent of their portfolios on average in cash, according to the Capgemini World Wealth report. A year previously, that figure was 27.2 per cent."



My view: No surprise here, if you won the game, why keep playing. The one thing I would disagree with is that $1m in assets is not really a HNWI.

In any case, this data shows why giving tax cuts to the rich doesn't work. The ones who already ARE rich are not the risk takers, who will innovate and drive the economy forward. Those innovators are the ones who are not rich yet, but want to be rich. The utra rich are the ones whose objective is wealth preservation rather than creating new wealth. Cash hoarded by those people is directly taken out of the economy. Yet, we decide to tax those people less and less, aiding their wealth preservation. Why would anyone rational do anything like that?

 

Everyone should be tax at the same rate. No Free ride for anyone.

 

These are people with already over a million in investiable assets..so they are playing the game still...with a lot of money.

Also cash, and cash equaliates, doesn't mean they aren't saving and investing...just in shorter term investments....https://www.investopedia.com/terms/c/cashandcashequivalents.asp That are much more liquid. Moreover, this isn't an article about the US Market....UBS is a Swiss bank....

 

I bet its rich Democrats as well as rich Republicans. If you were rich and hearing democrat candidates talking about taking from you and giving it to illegal immigrants and everyone else that doesnt want to work, wouldnt you be hoarding your money to see who wins the election.

The rich didnt get rich being stupid or lazy and they arent going to give up their treasure to looney toon progressives and their wild ideals and that goes for rich democrats also.

 

Welcome to the forum.

I agree, the rich are not stupid. They figured that instead of innovating (which is hard), they'd rather lobby the legislature (easy), so they can pass down their wealth for generations without tax (I am exaggerating here). Thus, we can have tons of spoiled trust fund babies, who won't have to work a day in their life, while the majority of the population can't afford health care.

BTW: I am in the top 10% with respect to investable assets. I know the emotions behind starting to play it safer the more you have.

 

Sorry, but the data shows the tax cuts did work, record low unemployment and consumer confidence at an 18 year high. Rather than rich, I prefer to call them job creators, poor people don't create any jobs.

 

Just because you have capital doesn't mean you have found a decent venture to stick it in to grow.
In point of fact, the more capital you have the more demands for it you have the more projects you have to vet and do due diligence on. There are only so many hours in the day, and when you're already rich you don't need to work all hours of every day to make the new gravy venture go, you've already got gravy. You can just say "I pass it doesn't seem solid enough for me to want to **** with".

 

We also learned yesterday that during calendar year 2018 the median U.S.income showed ZERO growth.

 

They already are. On the first $100,000, Bill Gates pays the same tax rate as I do.

 

Hey, how do they create jobs with cash under the mattress?

Second, if you want jobs like gardeners, maids, butlers, housekeepers, then yes, feel free to give the ultra-rich more tax cuts. Because that's what will happen with unchecked generational wealth, like in Gregorian England.

 

Wealth managers are parasites at best, and, oftentimes, flat-out thieves.

Frustrated wealth managers is a good thing.

 

The unemployment rate was 4.75 the day Dirty Donald took office on January 20,2017, today it is 3.7%???A whole whopping 1% decline since he took office???

 

You do realize, your pie charts aren't showing much of a change in cash and cash equivalents. .7% is a burp. The bulk of the change in investments comes under 'alternative' investments and 'fixed income'. So, it doesn't mean they are hoarding cash, they just aren't putting it in equities, where managers can slice off a piece of that pie....

 

Well, its their money and they should do whatever they want with no government interference.

 

If you are living in the one party rule totalitarian state and America's first third world state, California... California's inflation rate is twice as high compared to the rest of America.

 

Yes, the lowest in 50 years.

 

What are you talking about? Median household income hit a record high in 2018, while poverty declined: https://www.washingtonexaminer.com/...it-record-high-in-2018-while-poverty-declined

 

A whole .7% increase bothers you? Decreasing exposure to the market at it's peak isn't bad advice. Your link was about what the rich are doing with their investment income, it has nothing to do with what business owners are doing in their business with extra money, such as hiring, investing in equipment, etc.

Wait, the $10K Salt cap raises taxes on a group, two thirds of which are the top 1%. I thought the LW wanted to raise taxes on such people?

 

I'm not talking about the changes since the tax cut. What I am talking about is the general tendency of the wealthy to hoard the wealth in cash and safe investments, instead of spending their wealth or stimulating innovation. Because that's what is going to happen when the wealthy are allowed to amass generational wealth through hoarding: The economy will become stagnant, innovation,which is the engine of our economy, will be inhibited.

Bumper sticker talk like "people should keep their own money" is cheap. The difficult part is to generate an economy, in which innovation is maximized.

 

What do you mean "are allowed"? its their money. Does having more justify stealing it from them?

 

You haven't proven the wealty are hoarding case after the tax cuts. UBS is an international bank, based in Europe for one...this is a cross section of all their clients, who already have over a million invested assets....these clients come from all over the world, how many are Americans? More importantly, you fundamentally don't understand what cash or cash equvalients are....that doesn't mean they are putting cash under the bed...they are quicker investments, T-Bonds, Govt Bonds, etc that are much more liquid.

 

No, that's what happens in socialist nations like Venezuela where your ideas prevail. Shouldn't you be worried about the half the country that pays no income tax?

 

Arguendo that the tiny change in the OP pie charts is meaningful (it isn't), it is instantly explained away by an aging population that moves more and more into cash as it ages. This is working as intended, prudent, not any nefarious scheme by the rich. Only a financial moron would interpret or buy into the negative claims in the OP. It is just more hollow gov-edu-union-contractor-grantee-trial lawyer-MSM Complex wealth resentment pablum designed to divide people and foment resentment.

OP also engages in another Complex wealth resentment lie narrative, one of the silliest ones, that investors who hold "cash" are somehow "hoarding" wealth out of the economy. Absurd on its face.

1. "Cash" in investment terms, includes all demand/savings deposits, money markets, accounts backed by T-bills, short term municipal/corporate obligations. CDs of short maturity, and other highly liquid low yield investments. The Complex relies on financial ignorance to manipulate resentment by avoiding the true definition of "cash" in its lie narratives, inaccurately implying that "the rich" are filling mason jars or mattresses with money that does no one but them any good. This is a lie.

2. ALL investments, monies held in any institution in WHATEVER FORM are ALWAYS "at work" in the economy as a matter of irrefutable fact, not opinion. In fact, due to the nature of fractional reserve banking, their effect in the economy is MULTIPLIED to a far greater degree than direct stimulus consumption is multiplied. When held in CDs, savings, checking, the money is loaned out down to the prevailing reserve requirements, thus multiplied in aiding local commercial and consumer financings.

Moreover, investments in Tbills and short term munis alternatively help liquefy federal government debt and finance much needed infrastructure in communities, roads, bridges, airports, schools, civic buildings, culture, public services of all manner.

3. Arguably, money in accurately defined "cash" can have more impact on day to day lives of local citizens than money held in equities, making the pro equity part of the OP claim moot.

So why do they constantly push direct stimulus? Because that goes through the wasteful, corrupt, incompetent government sieve that enriches THEM. Private sector investments do not. It's that simple.

4. These things are obvious, are not controversial, so why the perpetual lies about "the wealthy hoarding cash" we see often parroted from gov-edu-union-contractor-grantee-trial lawyer-MSM Complex sources here? Simple, because the aim is to take more from YOU, the private sector taxpayer, for THEM, their and their family's government pay for far less work than competitive private sector taxpayers perform, their often grafty gov contracts, their outrageous (tax deferring) pensions, their often grafty grants, their advertiser enriching and thus MSM enriching redistribution.

They don't know much if anything about the real economy, they are near wholly ignorant of it. What they and their lying unions, et. al. know is that if YOU, not "the rich" get to keep more, THEY, not "the poor," get less of the fiat money they are willing to steal from YOU at the end of a government gun barrel.

It's that simple, and that is why our country is subject to the divisiveness of near infinite "wealth resentment" lie narratives, ironically paid for by YOU the private sector taxpayer. That's right, their massive anti taxpayer advocacy campaigns, all the many lies they spew about wealth or anything else, are paid for by YOU/US in the private sector by force.

That is why... see sig.

 

They are keeping their powder dry and that's a bad thing? That's how markets work. If they are HNWI's they should know what's best as far as their investments are concerned. They are trying not to become LNWI's even though a lot of people would like to see that happen.

 

Why should he be worried about kids, seniors and students?