Wealthy Spending Money - Charities See Less

I dont think it will come as a surprise to many AW Blog readers that the truly wealthy have been and continue to spend money on luxury items. We have seen it in some of the prices paid for the best fine art available, and we also have seen it in the form of luxury item purchases, from watches, to art to jets and yachts.

Katya Kazakina has an interesting article in Bloomberg on the spending habits of the wealthy. She notes they are hedging against inflation by buying tangible property such as luxury items and art. The interesting aspect of the article is the statement they are actually giving less to charity.

Kazakina states

Most individuals with assets ranging from $1 million to $5 million, excluding primary residences, had 30 percent in luxury collectibles in 2009, up from 27 percent in 2008.

‘I Have Arrived’

“These are status symbols you can overtly show,” Van der Linde said. “They say, ‘I have arrived.’”

For those with more than $30 million in investments, art was the largest of the six passions, the report said.

More investors began adding art, coins, wine and antiques to their portfolios. Investors in India, China and the Middle East tend to hold art and other tangible assets as an inflation hedge, the report said.

“In emerging economies, art has been part of the overall investment portfolio for a while,” said Van der Linde. “Now you are starting to see the same trend in the mature markets.”

The annual wealth survey covered 71 countries and drew on interviews with 1,200 wealth managers who serve 150,000 clients. There were many regional differences in spending trends.

American and Japanese millionaires spent the most on luxury collectibles. Europeans and Latin Americans put more emphasis on art. The rich in the Middle East and Asia focused on jewelry, gems and watches, according to the study.

Giving Less

Philanthropy was another area where the wealthy have become more focused and cautious in the aftermath of the financial crisis, Van der Linde said. In the U.S., total charitable contributions fell 3.6 percent in 2009 to $303.75 billion from $315.08 billion in 2008, according to Giving USA Foundation.

To read the full Bloomberg article, click HERE.