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A New Look at the Investment Habits of Affluent Versus Non-affluent Investors

New research from Wells Fargo details the differences in the savings and spending habits of affluent investors (those with assets in excess of $250,000) and those with less than $250,000 in savings. Here are some of the key findings of the firm’s Affluent Retirement Survey:
• Most affluent investors are not high wage earners; rather, they are very methodical planners. They set a plan with a high savings rate and set an asset allocation for their savings, and then make minor tweaks to those allocations over time. 
• Affluent investors believe that a 401(k) plan is the best place to save for retirement. They don’t believe that Social Security will contribute greatly to their income needs in retirement. 
• Affluent investors seem to be underestimating the cost of health care in retirement. 
• There’s a big difference in the investment habits of the affluent versus the non-affluent: More than 50% of affluent investors utilize equities as a large portion of their asset allocation, while just 35% of the non-affluent prefer stocks and would rather invest in cash, CDs, fixed income, etc. — a key point for many retirement plan advisors who are dealing mostly with less affluent investors.

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