Three out of Four U.S. Investors Fear a Stock Market Correction
Global Atlantic Study Finds Investors Favor Income and Capital Protection Type Investments, But are Still Overweight in Equities; 59% of Employed Investors Said Big Market Downturn Would Impact Retirement Plans
These are some of the major findings of a
Even with stock market risk concerns high, about 7 out of 10 investors (69%) said that their investment vehicles are subject to the stock market moving up and down. In fact, fifty-nine percent (59%) of employed investors said that a significant stock market drop would inhibit their ability to retire when they want, while twenty- five (25%) percent of those already in retirement said it would disrupt their retirement.
Asked how the 2008 financial crisis and stock market decline impacted the value of their savings and investment portfolio, about one in 10 (9%) investors reported a loss of more than 50% in value, about a quarter (23%) said a loss between 25 and 50% in value, and a third (34%) said a reduction of 10 to 25% in value. Sixteen percent (16%) or respondent could not recall the change in value.
“Investors felt the pain from the 2008 Financial Crisis, but our study indicates many are not prepared for another significant downturn and the impact it could have on their retirement,” said
The study provided some rationale as to why investors continue to stay with equity investments as just over half (52%) believe that the stock market can sustain continued growth for the next five years without a downturn of 10% or more, while just less than half (48%) don’t believe this can happen.
According to the Global Atlantic study, the most popular investing strategy is steady income focused investments (34%), followed by protecting/capital preservation investments (26%). The third most popular strategy was growth (24%). Women placed a higher value on both income (43% vs. 34%) and capital preservation/protecting money (30% vs 23%), compared to men. More than one-third (36%) of retirees valued capital preservation/protection versus 19% of those employed.
Forty six percent (46%) of U.S. investors said they found equity investments (stocks, mutual funds, ETFs, options) equally appealing as interest-bearing investments (bonds, CDs, money markets, etc.), while 32% said they prefer equity and 22% prefer interest-bearing products. More women preferred a diversified (combination of equity and interest bearing products) portfolio, compared to men, 52% to 38%.
“While we found a clear preference for more income producing and capital protection type investments, the study found investors were over weighted in the stock market and not prepared for a sizable or prolonged downturn. More importantly, two out of three investors still in the workforce said a significant downturn would disrupt their retirement plans and timing,” stated Nelson.
When asked if you took all your money out of the stock market what would you do with it, forty-four (44%) percent of U.S. investors said purchase interest bearing accounts, while 19% of investor said they would purchase an annuity. Other investments choices when pulling out of the stock market include cash (13%) and gold (9%). Thirty- five percent said they were not sure.
The typical
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There are a multitude of different products that may be accessed for retirement income needs. For example, stocks, bonds, ETFs, mutual funds, and variable annuities are securities and have different risk/reward characteristics, liquidity properties and tax consequences, particularly when compared to interest bearing products such as CDs, savings accounts, money market accounts, fixed annuities and fixed index annuities. Certificate of Deposits (CDs) are bank products that are
Variable annuities are sold by prospectus. The prospectus contains investment objectives, risks, fees, charges, expenses, and other information regarding the variable annuity contract and the underlying investments, which should be considered carefully before investing money. You can obtain a prospectus from your financial advisor or by visiting globalatlantic.com. Please read the prospectus carefully before you invest or send money.
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