Friday, June 27, 2014

Rich investors get richer

The evidence that the rich are getting richer doesn't seem to be slowing.

Researchers from Imperial College Business School, Columbia University and the University of Maryland found that wealthy individuals in the US can get in relative terms up to 70 per cent times greater returns on their investments than those with modest wealth, when the yields on assets such as stocks and bonds are calculated. The team say that this further widens the income gap between rich and poor and potentially creates disparities in society.

Rich investors have better access to resources and advice from professionals such as asset managers. This enables them to better determine where to invest their money on the stock exchange.  In contrast, investors with a modest income are unable to afford the same access to information and expertise and they're also wary of being exploited by rich investors.  This means that they're less likely to invest in riskier stocks and bonds that could provide them with a higher return on investments.

 “Our research shows that some wealthy individuals are making substantial profits on stock markets because they have tools at their disposal that individuals from modest incomes don't.   This further creates a widening income gap between rich and poor...”  Professor Marcin Kacperczyk, co-author of the report, said. 

No comments: