Investors Avoid Equities, Bonds for Cash

U.S. workers hold almost half of their investable assets in low- or no-return cash strategies, potentially jeopardizing retirement readiness in an effort to avoid risk.

Many investors are still uncomfortable taking on more risk to achieve better returns following the 2008-09 financial crisis, according to BlackRock’s first Global Investor Pulse Survey. Those ongoing worries have caused U.S. investors at all income levels to keep 48% of investable assets in cash or cash-like securities, leaving just 18% for stocks and 7% in bonds.

The results reflect a global investment environment still “plagued by uncertainty, policy confusion and political dysfunction,” survey researchers said.

Also telling is the 50% of affluent investors who feel income-generating investments are riskier today than 5 years ago. The same percentage of affluent investors said they were not knowledgeable about the best ways to generate income in today’s markets.

Other factors driving assets into low- or no-return cash investments are high personal debt and bill payments, according to the survey. The 49% of take-home pay devoted to living costs and personal debt is particularly high in the U.S. when compared to the 40% global average.

They survey also found Americans saving 16% of their pay each month, compared to the 18% measured globally. When asked what would encourage investment of cash savings, nearly one in three (32%) survey respondents indicated “less personal debt.”

In terms of worries moving forward, U.S. retirement savers said healthcare costs, job security, and the state of the wider U.S. economy topped the list.

More on the survey and its methodology can be found here