Investors' market confidence plunges due to pandemic, study shows
Majority plan to prioritize having an emergency fund moving forward
The coronavirus pandemic caused investors’ optimism to plummet, but they appeared more positive about the prospect of an eventual turnaround.
New data from Wells Fargo released Wednesday showed investor optimism in the second quarter hit its lowest level since the fourth quarter of 2013 – after reaching 20-year high at the outset of 2020. Optimism also suffered its largest short-term drop since at least 1996, falling the most in areas related to unemployment and economic growth.
As of May, about 27 percent of nonretired respondents said they had suffered a loss of income, while 15 percent had been laid off or furloughed.
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The financial effects of the pandemic have been harsh on some pre-retirees – with 40 percent of people aged 50 to 64 saying they are either somewhat or very likely to work more in retirement than they had intended as a result of market movements. These older investors are also more likely to say they will retire later than they had anticipated.
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Overall, however, the Wells Fargo survey shows that many investors are keeping a healthy holistic perspective of the situation. About 60 percent of people said it was a good time to invest in the financial markets, while 70 percent maintained some level of confidence about investing in the stock market as a means to build wealth for retirement. Researchers noted this could be the result of having lived through the 2008 financial crisis.
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When it comes to the rest of the year, investors are largely split about whether the worst is past – or still to come – but most agree that setting aside cash in an emergency fund should be a priority. Sixty-four percent of people said having an emergency fund is a change they would make to their investment strategy as a result of the pandemic.
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