According to the CNBC Millionaire Survey, next year’s American millionaires are betting on a strong stock market, with many expecting double-digit gains.
According to the survey of households with investment assets of at least $ 1 million, 70% of millionaires expect the S&P 500 to rise by at least 5% next year. According to the survey, nearly a third of those surveyed expect a gain of at least 10% by 2021.
The S&P 500 enters the final weeks of 2020 with an increase of almost 14%.
Despite market levels being near or at record highs, most millionaires plan to maintain or expand their stock holdings next year, the survey said. Only 9% plan to reduce their share holdings. That optimism in the face of the Covid pandemic and economic uncertainty could be a strong tailwind for the market, as millionaires own more than 85% of individually held stocks.
“I expected more of them to make plans to exit the market at these levels,” said George Walper, president of Spectrem Group, a research and consulting firm. “They have clearly adapted to volatility.”
Half of the millionaires surveyed expect their personal wealth to increase next year, while another 40% say they expect it to remain the same.
Millionaires on the biggest financial risks next year depend more on political parties than wealth. Republican millionaires cited taxes as the greatest risk to their assets in 2021, while Democratic millionaires cited the virus as the greatest risk.
Less than a third of millionaires say the economy will be weaker next year, and most say interest rates will stay the same, which will also benefit stocks. Their bright outlook is yet another sign of a K-shaped recovery, with middle and lower income earners and small businesses still struggling, while higher-income workers and investors continue to see improvements.
Stocks are the millionaires’ favorite asset class next year, with 44% planning to add stocks. When asked which market sectors they want to add more money to in 2021, technology comes first, followed by healthcare and financial services.
“Considering everything that is happening around us, they are optimistic,” said Walper. “It’s the vaccine and the hope of a reopening.”
Spectrem Group conducted the research for CNBC. It polled 750 participants with investment assets of $ 1 million or more in November.