August 24, 2012

TD Ameritrade Poll Finds Investors Shying Away From Risk

Facebook’s IPO had little impact on investor confidence, survey says

As is often said, the pain of discipline is nothing compared with the pain of regret, something that advisors believe applies to investing. A new survey from by TD Ameritrade found that, unsurprisingly, many investors regret their prerecession financial decisions. It also found the current economic climate has curbed many investors’ appetites for risk.

According to the company, when asked what, if any, changes they made to the way they’ve invested in the markets over the past six months, 34% of investors surveyed said they had taken on less risk. That’s compared to 22% who answered the same just three months ago.

Looking ahead to the next three months, 47% of investors said their outlook for investing conditions in the U.S. stock market is “optimistic,” compared with 66% who said the same back in April.

The survey notes that if they could go back to a time before the recession of 2008-2009, many investors would have changed the way they managed their money. Specifically:

• 71% report they would have spent less and saved more

• 65% report they would have lived within their means

• 60% report they would have taken more personal responsibility for managing their money

Perhaps attempting to pacify these regrets, investors continue to feed their retirement accounts, and 86% said they contributed the same amount as usual or more to their IRA over the past six months.

“The slow recovery of the U.S. economy, Europe and its ramifications on global and domestic economies, and the political situation in the U.S. are all weighing heavily on the minds of retail investors,” Tom Bradley, president of retail distribution with TD Ameritrade, said in a statement. “Despite the bearish sentiment, our clients continue to monitor accounts at levels similar to last year, but they’re waiting for a little more clarity on key issues before they completely engage.”

In response to “Which of the following would improve your market sentiment?” respondents counted “more jobs” as the top response, followed by less government spending and resolution of the European debt crisis.

And the hoopla surrounding the Facebook IPO appears to have had little impact on investor confidence, with 60% reporting none at all and an additional 36% reporting minimal to somewhat of an impact.

The firm says 1,035 investors participated in an online survey conducted by Research Now on behalf of TD Ameritrade between June 27 and July 9. The margin of error was plus or minus 3%.

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