Americans Reporting Feeling More Exposed to Market Volatility

And a majority, 65%, say it is tougher now to get ahead financially than it was before the financial crisis, Natixis found in a survey.

Nearly half (48%) of Americans believe they are exposed to greater market risk today than they were before the 2008 financial crisis, Natixis Investment Managers learned in a survey of 750 investors. Sixty-five percent say it is tougher now to get ahead financially.

Nonetheless, Americans expect annual returns of 9.8%, which advisers say is significantly higher than what is realistic. Those who entered the financial markets think their returns should be 11.3% above inflation.

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Eighty-two percent say they understand the risks of the current market environment, but 38% are not willing to take on any additional risk. Rather, 85% say they prefer safety over performance. Fifty-three percent say market volatility is undermining their ability to reach their retirement goals.

Asked for their views on market volatility, 47% say it is something they simply endure, 28% say it creates investment opportunities, and 15% say they do not understand its effects. Sixty-seven percent say they are prepared for a market downturn.

“A decade of rising markets, low interest rates and subdued volatility may have given investors unreasonable expectations and a false sense of security,” says David Giunta, CEO for U.S. and Canada for Natixis Investment Managers. “Our research suggests many investors’ instincts could undermine their financial success as volatility returns to the markets, but their continued trust in their financial advisers should help them remain disciplined as market become more turbulent.”

Seventy-one percent of investors feel financially secure—for now. Fifty-two percent say the bull market of the past 10 years has bolstered their confidence that they are on track to reach long-term goals.

Seventy-eight percent are confident that their portfolio is properly diversified. This is true for 86% of those who started investing after the financial crisis. However, 51% do not know what the underlying investments are in the funds they own. Only 53% have rebalanced their portfolio in the past year.

While 92% think it is more important for their investments to deliver long-term results than short-term gains, 28% are focused on short-term performance, and 26% say they tend to sell their investments during periods of volatility. The latter is true for 40% of those who started investing after the financial crisis.

Natixis says that investors need to learn how to balance risk and return. They also need to be educated about the benefits of active versus passive investments, and their trust in the markets needs to be rebuilt.

Among those who lived through the financial crisis, 31% sold some—or all—of their assets. Twenty-two percent later regretted that decision. Thirty-one percent wish they had gotten back into the market sooner, and 22% still are not invested, or reinvested, at the level they were before the crisis hit.

Eighty-eight percent of investors say that fees are an important consideration when selecting an investment, and 53% realize that passive investments tend to have lower fees.

When it comes to making financial decisions, 70% trust financial institutions, and 75% trust financial advisers. Ninety percent working with a financial adviser say that he or she is trustworthy.

“Investors’ misconceptions about risk and volatility may be clouded by their unrealistic return targets,” says Dave Goodsell, executive director of the Natixis Center for Investor Insight.

CoreData Research conducted the survey for Natixis in September.

Women Plan to Take Steps to Make Their Money Grow

However, only 24% of women say they are comfortable with their knowledge on investing, Fidelity Investments found.

Seventy-two percent of women across all ages plan to take steps within the next six months to make their money work harder and grow, according to the Fidelity Investments “2018 Women and Investing Study.”

Forty-four percent of women are investing money they have outside of retirement accounts and emergency funds in stocks and bonds; 59% of men are taking this action. Fifty-nine percent of women are not investing, leaving nearly all of their savings in cash or bank accounts, which are earning less than 1% in interest.

Only 24% of women say they are comfortable with their knowledge on investing. If they were given $25,000 to invest, only 44% say they would know what steps to take to do so.

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However, 48% of Millennial women are investing their money, as are 40% of Gen X and Baby Boomer women.

Thirty-five percent of women say they have $25,000 or more sitting in savings. Forty percent say that their finances keeps them up at night at least once a month.

“Women need to demand more from their money, so they can control their financial futures,” says Kathleen Murphy, president of Fidelity Investments’ personal investing business. “Women deserve to have their hard-earned savings work just as hard as they do every day.”

Fidelity conducted the online survey of 1,172 women in September.

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