During October and November, a study was conducted by a global market analytics firm. The study polled 1,005 people that invest in equities through individual stocks, exchange-traded funds, mutual funds, 401(k)s and individual retirement accounts. Here are the results.
Three out of four U.S. investors forty years of age and older show concerns of a correction bringing the downfall the long-running bull market in stocks, but most refuse to exit their positions. Sixty-nine percent of older investors maintain heavy exposure in equities, theoretically leaving many vulnerable for the expected downfall.
The average U.S. investor 40 and over invests $210,051 in the stock market, while retirees average $236,148 in investments, according to the study.
“Investors felt the pain from the 2008 financial crisis, but our study indicates many are not prepared for another significant downturn,” said Paula Nelson, President at Global Atlantic.
“It’s clear that investors need a better strategy to protect themselves from future market corrections and volatility, especially as they enter their peak earning years and prepare for and enter retirement,” Nelson added.
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As for retirement, fifty-nine percent of investors that are currently employed stated that a substantial stock market drop would delay their retirement, while a quarter of retirees stated it would negatively impact their retirement. However, fifty-two percent believe the market could withstand continued growth for five years without a decline of 10 percent or greater.
According to the study, the most popular investing strategy is steady income-focused investments (34 percent), followed by protecting/capital preservation investments (26 percent) and growth (24 percent).
Women showed to be more conservative. Forty-three percent of women placed a higher value on income compared to thirty-four percent of men, while thirty percent of women greatly valued capital preservation compared to twenty-three percent of men. Over one-third of retirees placed a higher value on capital preservation, compared to nineteen percent of the employed.