Rich people keep passion investing

June 25, 2009

The credit crisis has hit the world’s super rich, with their financial wealth shrinking by almost a fifth in 2008, but they are flocking to luxury goods and jewellery in a  flight-to-safety.

A survey by Merrill Lynch Global Wealth Management and CapGemini found that the population of high net worth individuals (HNWI), with net assets of at least $1 million, fell 14.9 percent in 2008 from the year before. The population of ultra high net worth individuals, with net assets of at least $30 million, fell 24.6 percent.

Luxury collectibles, which include automobiles, boats and jets, remained the most preferred choice of “passion” investments, representing 27 percent of the portfolio last year, compared with 26 percent the year before.

Art collections rose to 25 percent of the passion portfolio from 20 percent in 2007 while jewellery, gems and watches rose to 22 percent from 18 percent as alternative flight-to-safety investments.

Sports investments, including sports teams, sailing and race horses, rose to 7 percent from 6 percent while miscellaneous — which include club memberships, travel, guns and musical instruments — more than halved to 7 percent.


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Most of those so-called luxury investments are moneypits as well, retail profit margins on luxury goods are too high, if forced to sell you lose big time.

Posted by Nikkei 225 | Report as abusive

Well, i dont realy think that buying this kind of luxuries is the right thing to do this days

Posted by David | Report as abusive

Some of these items are a pretty good bet against losing value. Some of these items are good investments, and some are just a hole to throw money into. I deal in cars and it is tough to pick the winners and the losers. I like to drive them so I do enjoy the investment. I rarely have made any money on boats, but I do know some people who have done quite well on airplanes. Right now it is pretty tough to guess where this ship of a country is headed, but if the bankers have their way they will crash it into the rocks again.

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