A study by Barclays has revealed that high-net-worth individuals and millionaires have around 9.6% of their assets tied up in luxury goods including fine jewellery, coins and precious metals, items the bank has dubbed “treasures”.
The report, outlined in The Times today, offers that millionaires across the world have been busy buying up high-value goods that should retain their worth.
Classic cars accounted for the highest share of the wealth, followed by fine jewellery and precious metals.
The United Arab Emirates high-net-worth individuals keep around 18% of thier wealth tied up in luxury goods, with Saudia Arabia close behind at 17%.
In China, a booming market for new luxury purchases, the figure was also 17%.
Britain, however, lags behind, placing less importance on the worth of luxury goods, with only 7% of British millionaires’ money tied up in high-value products.
Greg Davies, head of behavioural finance at Barclays, told The Times: “People have felt insecure about investing in the financial markets.”
Therefore, more are looking to other potential save-havens to keep their cash safe.
The past five years is said to have shown a clear rise in the number of millionaires investing in luxury products, with many planning to make more high-value purchases in the coming five years.
At present, around 70% of high-net-worth individuals are said to have money invested in high-end jewellery, while 40% are planning to make fine jewellery purchases in the future.
For precious metals this number is a little lower, with 30% of global millionaires said to have a stake of their cash in the metals market. About 24% plan to make an investment in the precious metals market in the next five years.
When it comes to the reasons for making such purchases, not all is said to be motivated by money, however, with around 62% of those in the study saying they made the high-value purchases for “personal enjoyment”, and 37% buying up luxury goods for their children or grandchildren to benefit from or enjoy.
Only 21% are thought to have made luxury purchases for financial security, if “conventional investments fail”.
Interestingly in India, another emerging market for luxury goods ownership, 67% of high-net-worth individuals had purchased “treasures” for financial reasons – the highest percentage.
India was followed by Qatar (50%), Saudi Arabia (40%) and China (39%) with a view to buying luxury products for financial sercurity.
In Britain only 11% of millionaires’ cash is tied into luxury goods for financial purchases, while Switzerland had the lowest percentage of money held in luxury good for financial reasons: just 7%.