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Magic number for rich: $5M

By Judy Martel · Bankrate.com
Monday, July 29, 2013
Posted: 6 am ET

Despite a fragile economy and a volatile stock market, the majority of wealthy investors in a survey say their long-term outlook on both is optimistic.

A third-quarter UBS report finds that the top priorities for the wealthy are financial security and caring for family. Four out of 5 investors surveyed are caring for aging parents or adult children, with 1 in 5 sharing a home with these adults.

As far as assigning an actual dollar amount to the definition of "wealthy," $5 million seems to be the magic number. The wealthy have also been playing it safe over the past three years by maintaining an average of 20 percent of their wealth in cash.

Memories of the 2008 financial meltdown are fresh in the minds of investors and the reason they are reluctant to reduce their allocations to cash. However, having a cash cushion is making them comfortable with taking advantage of the stock market's bull run by aggressively investing part of their portfolio in equities.

The survey found that when the rich have a plan that addresses their two top concerns -- long-term care for themselves and the financial health of children and grandchildren -- their confidence in achieving goals soars to 85 percent. That's true whether the respondents have $1 million or $5 million.

Although 51 percent of respondents say the Federal Reserve's stimulus-easing program will cause some short-term economic pain, in the long run they believe the economy will benefit.

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