High-Net-Worth Investors Confident

Those with money are feeling quite confident about the stock market, with a majority of high-net-worth investors optimistic about their investments for 2013, according to a Fidelity Investments survey.

More than three-quarters (77%) of high-net-rth individuals expect that they will either beat or match the market this year. High-net-worth individuals were those with at least $250,000 in investable assets.

“Investors feel optimistic that the economic recovery in the U.S. is under way, yet the memory of the market downturn is causing that optimism to be tempered,” John Sweeney, Fidelity executive vice president, Retirement and Investing Strategies, said in a statement.

High-net-worth investors are so confident in the market, that 81% said the Dow Jones will be up at the end of 2013. Furthermore, 17% believe that the market is still undervalued and so the majority prefer stocks over high-yield bonds.

However, that optimism in the stock market isn’t bulletproof. Quantitative easing concerns the high-net-worth individuals surveyed and 70% worry that when the Fed ends quantitative easing it could depress stocks. As a result, 88% of holding an average of one-fifth of their portfolio in cash until they find the right investment opportunity.

“As investors feel more certain about job growth, encounter strong corporate earnings and better understand fiscal policy changes, they will invest in the market with more confidence,” Sweeney said. “That confidence leads to better decision making and enables investors to withstand volatility in the market.”

More than half (53%) are concerned about how volatility will affect their portfolios and just a third are focused on combating inflation.

“It is even more critical that investors create an investment plan to help them identify the appropriate exposure to equities that is right for them,” Sweeney said. “Investors then should contribute to their portfolio regularly in up and down markets, and revisit their plan frequently to ensure it is working to meet their goals.”

As high-net-worth individuals, the new tax changes from the beginning of the year will affect these investors more than the average person. As such, a third have already altered their investment strategy because of the income tax increase. Another 21% of high-net-worth investors plan to make some modification, although 41% won’t do anything