Czech dollar millionaires confirm their transformation from entrepreneurs to investors. The main source of their wealth is investments, especially in the form of shares, private equity, i.e. private capital funds or corporate bonds.
This strategy to enhance their own property is successful for them. According to the J&T Banka Wealth Report 2024 survey, which maps the attitudes and investment behavior of Czech and Slovak dollar millionaires, the wealth of most of them grew.
“Czech and Slovak dollar millionaires fared very similarly. They have had a successful year and their wealth has grown. But the scissors are opening more and more in terms of mood, pessimism is decreasing in the Czech Republic and Czech households are returning to a normal state. On the contrary, in Slovakia, despite the fact that the wealthiest group of the population is doing well in terms of wealth, pessimism is growing,” comments J&T Bank chief economist Petr Sklenář on the results.
Although the Czech dollar millionaires see the future positively and believe that they will do well in the next year as well, they assess the current economic situation in our country cautiously. Under the influence of global changes and trends, they are changing their investment behavior and plan to take advantage of all the opportunities offered, especially in the field of energy and the arms industry. It is here that he sees a chance for even greater profits.
Czech dollar millionaires expect the most interesting appreciation from shares. In response to the expected slower growth of stock markets, two-thirds (69%) of them plan to increase the share of value and dividend stocks at the expense of growth ones.
Where are Czech dollar millionaires waiting for the most interesting appreciation?
“Stocks are a talking point for dollar millionaires and are the component of their portfolio that they spend the most time and interest in on a daily basis. They get inspiration for interesting stock opportunities from a banker or adviser, or from investment newsletters or recommendations from investment banks,” J&T Banka writes about the results of the survey.
Year after year, investments in private equity funds are perceived as more attractive in terms of yield. Investments in business attract not only their returns, but also the opportunity to participate in the growth of companies and at the same time the opportunity to invest alongside successful businessmen. Over the past three years, the role of private equity in wealth growth has significantly strengthened – from 14% to 21% in the Czech Republic and from nine percent to 20% in Slovakia.
Private equity
Private capital funds, also known as private equity funds, have several basic features:
- investments in companies that are not publicly traded on the stock exchange
- investments are limited in time, usually five to ten years
- capital in private equity funds is often placed by large institutional investors such as banks, insurance companies or investment firms of successful entrepreneurs
Among the main companies focused on operating private equity funds in the Czech Republic are ARX Equity Partners, Genesis Capital and Jet Investment.
From the point of view of the richest people in the Czech Republic, the real estate market is also moving. A third (34%) of Czech dollar millionaires expect interesting appreciation from building land, for residential real estate it is 24% of respondents. In addition to the Czech Republic, they also own properties in the Mediterranean (Italy, Spain, Croatia) and plan to continue investing in this region.
On the contrary, these investors have less and less interest in traditional conservative instruments, such as time deposits and government bonds, mainly due to the expected smaller appreciation.
Where do Czech dollar millionaires expect a decline in appreciation?
“The continued decline in interest rates of the Czech National Bank reduces the attractiveness of fixed interest assets. The decline in appreciation expectations was thus logically recorded in particular by term deposits and government bonds,” comments J&T Bank Chief Economist Petr Sklenář on the results.
According to him, the change in rates is such a strong impulse for changing investment behavior that it is perceived not only by the rich, but also by ordinary savers from among the general population. Therefore, 80% of Czech dollar millionaires plan to limit investments in government bonds until they offer a better risk-return ratio.
A similar situation can be observed with corporate bonds. “Corporate bonds still remain attractive thanks to coupon payments, which range from seven to eight percent for Czech issues. This yield allows for a solid return for several years to come. However, falling interest rates are gradually reducing yields on new issues, which may discourage investors looking for long-term security of higher yields,” adds Petr Sklenář.
About the survey
The survey was conducted between August and September 2024 in collaboration with the Perfect Crowd research agency.
The aim of the survey was to map the investment behavior and lifestyle of Czech and Slovak dollar millionaires, i.e. people whose disposable assets are worth at least one million US dollars.
404 respondents from the ranks of dollar millionaires (277 Czechs and 127 Slovaks) took part in the survey. Data were collected through online questionnaires. The qualitative view was complemented by in-depth interviews with 29 respondents (18 in the Czech Republic, 11 in Slovakia).
Czech Dollar Millionaires: From Entrepreneurs to Investors
Czech dollar millionaires are no longer just the entrepreneurs we knew them as—they are transforming into shrewd investors! Yes, that’s right, folks! Instead of just flipping burgers or selling insurance, they’re now flipping equities and betting big on private equity funds and corporate bonds. Who needs a side hustle when you’ve got shares? They’ve got money to burn, and rather than wasting it on yachts and shiny things, they’ve got their eyes on the stock market!
Now, let’s talk about the results of the J&T Banka Wealth Report 2024. The survey, which maps the attitudes and behaviors of Czech and Slovak dollar millionaires, confirms that most of these top-tier individuals have had a banner year—because who doesn’t like watching their wealth grow like a very unmanageable hairdo?
Strange Bedfellows: Optimism vs Pessimism
According to chief economist Petr Sklenář, “Czech and Slovak dollar millionaires fared very similarly.” Well, that’s comforting! In the Czech Republic, optimism is on the rise, while across the border in Slovakia, it seems pessimism is throwing a grand party. Cue the disco lights and sad violin music!
Czech households are returning to their “normal state”—presumably one filled with stock tickers and investment newsletters, while Slovaks seem to be holding their “sad money” tightly. Yet, despite this, Czech dollar millionaires are looking at the future with a grin, and why wouldn’t they? They’re betting on energy and arms industries, folks—talk about a bright side! Who needs to save the world when you can invest in weapons?
What’s Cooking? Investment Preferences
So, where do these dollar millionaires expect their greatest fortunes? The answer is as follows:
| 1. Shares and share funds | 44% |
| 2. Private equity, investments in private companies | 35% |
| 3. Building plots | 34% |
| 4. Corporate bonds | 25% |
| 5. Residential real estate | 24% |
It’s obvious that stocks are the currency of conversation for these millionaires! More time is spent obsessing over share prices than figuring out which type of cheese pairs well with an £800 bottle of wine! And they aren’t shy about reaching out for stock tips from advisers and investment banks. Memo to self: get a banker on speed dial—sounds like a plan!
Private Equity: The New Darling
Private equity is also having its moment in the spotlight. With substantial yields and the chance to rub elbows with successful business moguls, who wouldn’t want a piece of that? Private equity funds saw an uptick, with interest soaring from 14% to 21% in the Czech Republic and from 9% to 20% in Slovakia over the last few years. Clearly, “getting in on the ground floor” has never looked so appealing!
What Makes Private Equity Shiny?
- Investments in companies that aren’t buzzing on the stock exchange.
- Limited time investment horizons—because everyone needs a deadline, right?
- Capital often comes from institutional investors like banks and insurance companies. Hello, stability!
Real Estate: Still a Hot Potato
Now, let’s not forget real estate! With 34% of millionaires eyeing building plots for appreciation, it seems bricks and mortar are still regarded as a solid play. And residential real estate isn’t being left out either—24% of respondents see it as a golden egg. Meanwhile, they’re extending their portfolios to sunny Mediterranean spots. Because why just dream of sunny holidays when you can own a piece of paradise while sipping cocktails?
The Decline of Tradition
In a surprising twist, these savvy investors are shunning traditional instruments like time deposits and government bonds—65% foresee diminishing returns from these sources. Economists like our buddy Petr Sklenář are calling it a logical reaction to declining interest rates. It’s as if these rich folks got the memo that “sleeping on cash” is no longer a thing!
The Survey: What You Need to Know
Conducted between August and September 2024, the survey aimed to map the rich lives of 404 Czech and Slovak dollar millionaires. Spoiler alert: Time deposits did not top the favorites list!
Conclusion
So, what’s the takeaway from this wealth extravaganza? The Czech dollar millionaires are acknowledging economic shifts and strategically pivoting into more profitable territories with a zest for high-risk high-reward strategies. If they can navigate this roller-coaster, just imagine what the rest of us could do if we followed suit! But hey—investing in a lottery ticket still sounds appealing too!
Czech dollar millionaires are increasingly transitioning from their roles as entrepreneurs to become seasoned investors. Their wealth accumulation predominantly stems from various investment strategies, with a particular focus on shares, private equity funds, and corporate bonds, reflecting a sophisticated approach to wealth management in an evolving economic landscape.
The J&T Banka Wealth Report 2024 reveals that this strategic pivot towards enhancing their investment portfolios is yielding positive results, with a significant number of respondents reporting an increase in their wealth. The survey meticulously tracks the investment behaviors and outlooks of the affluent in both the Czech Republic and Slovakia, showcasing emerging trends in capital allocation.
“Czech and Slovak dollar millionaires have enjoyed a successful year, with growth in their wealth being a common narrative. However, divergent sentiments are emerging; pessimism is notably on the decline within the Czech Republic as households stabilize, while Slovakia witnesses a rise in pessimistic outlooks despite its wealthiest individuals flourishing. This distinction highlights contrasting economic sentiments in the region,” observes J&T Bank chief economist Petr Sklenář regarding the survey findings.
Although Czech dollar millionaires maintain an optimistic long-term view, anticipating further financial success in the coming year, they express cautious evaluations of the current economic environment. Influenced by global shifts and emerging trends, their investment strategies are evolving, particularly favoring high-potential sectors like energy and arms, where they see opportunities for substantial returns.
Survey participants convey that the most promising appreciation in their portfolios is expected from shares. In light of anticipated slower growth in the stock market, a considerable 69% of these investors indicate plans to prioritize value and dividend stocks over growth stocks, signaling a strategic shift in focus.
Where are Czech dollar millionaires waiting for the most interesting appreciation?
Investment in stocks is of paramount interest for dollar millionaires, characterized by a concerted effort to identify lucrative opportunities. They often draw insights from bankers and financial advisors or utilize investment newsletters and recommendations from investment banks to inform their decisions.
The growing allure of private equity funds is evident among these wealthy investors. Not only do they seek attractive returns, but they also appreciate the chance to engage in business growth alongside successful entrepreneurs. Over the past three years, private equity’s impact on wealth appreciation has significantly escalated, reflecting a broader trend in investment patterns.
Private equity
Private capital funds, commonly known as private equity funds, possess distinct characteristics:
- investments in companies that are not publicly traded on the stock exchange
- investments are limited in time, typically spanning five to ten years
- capital in private equity funds is predominantly supplied by substantial institutional investors such as banks and investment firms of successful entrepreneurs
Czech dollar millionaires also project optimism in the real estate market. A significant portion, 34%, foresee promising returns from building plots, while 24% anticipate appreciation in residential real estate. Beyond local investments, many have diversified their portfolios with properties in Mediterranean locales including Italy, Spain, and Croatia, indicating a strategic expansion into lucrative markets.
Conversely, traditional conservative instruments like time deposits and government bonds are becoming less appealing to these investors, primarily due to diminished appreciation expectations associated with them.
Where do Czech dollar millionaires expect a decline in appreciation?
Petr Sklenář points out that the ongoing decline in interest rates set by the Czech National Bank undermines the attractiveness of fixed-interest assets. Consequently, the expectation of decreasing returns has notably impacted the allure of term deposits and government bonds.
This shift in interest rates serves as a significant catalyst influencing investment behavior across the wealth spectrum, prompting 80% of Czech dollar millionaires to consider scaling back their investments in government bonds until more favorable risk-adjusted returns are available.
A similar trend is evident in corporate bonds, which still appeal to investors due to their decent coupon payments, typically yielding around seven to eight percent. However, falling interest rates are beginning to affect the attractiveness of new issues, posing challenges for investors seeking reliable long-term yields.
About the survey
Conducted from August to September 2024, this survey enlisted the collaboration of the Perfect Crowd research agency. Its primary objective was to explore the investment behavior and lifestyle choices of individuals in the affluent segment of the Czech and Slovak population, specifically targeting those with disposable assets exceeding one million US dollars.
The survey garnered responses from 404 dollar millionaires—277 from the Czech Republic and 127 from Slovakia—collected through a combination of online questionnaires and in-depth interviews with 29 selected respondents, ensuring a comprehensive qualitative perspective on their investment strategies.
