According to a CNBC study, millionaires are saving money and wagering on higher rates.

According to the CNBC Millionaire Survey, millionaires are increasing their financial reserves in anticipation of rising interest rates and dismal stock markets in 2023.

The survey, which polls families with $1 million or more in investable assets, found that 34% of millionaire investors said they retain more of their money in cash. According to the poll, they now hold 24% of their portfolio in cash, a significant increase over the 14% they did a year earlier.

Due to their expectation that interest rates would continue high, 28% of poll respondents claimed they have increased their fixed-income investments.

The findings are consistent with a recent Capgemini poll that indicated a record 34% of global high-net-worth investors' portfolios were made up of cash or cash equivalents such as money markets, certificates of deposit, and other investments.

Elias Ghanem, worldwide head of Capgemini Research Institute for Financial Services, stated that these investors are switching from growth to value and preserving their investments. "At this time, being safe is preferable to being sorry."

Wealthy investors are still wary of the stock market, although their outlook is not as pessimistic as it was at the beginning of the year. A somewhat bigger fraction, 40%, of millionaire investors predict that the market will end the year higher while 38% predict that the S&P 500 will end the year down.

Since last year, when 69% of poll respondents predicted that 2023 would finish in a decline and only 22% predicted that markets would end higher, the market attitude has improved significantly.

Nevertheless, millionaires have a more pessimistic outlook on the entire economy. 60% of respondents predict that the economy will be "weaker" or "much weaker" by the end of 2023.

Inflation is one of the causes of their concern. Millionaire investors continue to stake their money on long-term inflation, which might result in higher interest rates for longer. More than half of millionaires believe it will take at least two years for inflation to reach the Federal Reserve's 2% objective, and 11% believe it would take at least five.

Since an inflationary stock market and economy are relatively new occurrences for younger investors, there are significant generational differences. One in four millennial millionaires predict that inflation will reach the objective of 2% within a year, while three-quarters believe it will reach that level in two years. In contrast, 59% of senior investors predict a delay of more than two years.

Even while the changes in rich consumers' spending are still minimal, inflation and increased interest rates are beginning to have an impact. According to the poll, more than a third of millionaire investors have reduced their restaurant spending over the last six months because of inflation, and 18% have put off buying a car. More than one in four wealthy investors report reducing their charitable contributions as a result of inflation, indicating that increasing costs may potentially have an impact on donations.

Based to the poll, a significant percentage of millionaires, 18% of respondents, say they will postpone a trip or holiday if inflation remains. As a result of increased rates, they are also taking on less debt; a third of them think they will do so this year.

Bank deposits are a plus for the wealthy. More than two-thirds of millionaires say they are not concerned or are "neutral" about the safety of their bank savings despite the instability in the local banking sector caused by the collapses of Silicon Valley Bank, First Republic, and Signature Bank. 7% of respondents indicated they were "very concerned."

Only 6% of millionaires polled changed their cash deposits from one bank to another as a result of the SVB crisis.

Online polling for CNBC's Millionaire Survey took place in April. The poll was open to a total of 764 respondents who had investable assets worth at least $1 million. The household's primary financial decision-maker or joint decision-maker had to be the respondents.

(Sources: cnbc.com)