Individual savers are feeling increasingly confident and want to invest more, but many have an unrealistic view on how their assets will perform in a market challenged by uncertainty and desynchronized monetary policies, according to the Schroders Global Investment Trends Survey, released Wednesday.
The study found that 57% of U.S. retail investors felt more confident about investment opportunities in the next 12 months than they did a year ago.
Eighty-eight percent of U.S. investors expected their investments to grow in the coming year, producing an average annual return of 10%. However, investors wanted most of their portfolio in lower risk, lower return assets like bonds and cash.
The vast majority of investors planned to increase or maintain the amount they saved or invested in the next 12 months, with 56% intending to invest more this year than in 2014.
On average, investors planned to increase the amount of savings or investments by 12% over the next year. Overall, 83% of U.S. investors were looking to generate income from their investments.
Research Plus Ltd. conducted the online survey in March of 20,706 retail investors in 28 countries who intended to invest at least $11,200 (or the equivalent) during the next 12 months. The survey included 2,000 U.S. participants.
Low Risk Appetite
Eighty-five percent of retail investors said they had profited from their investments in the past 12 months, with average gains of 9%. Schroders said this was consistent with global results, where 88% made a profit of approximately 10%.
However, the survey showed a significant disconnect between expected double-digit returns in the next year and investors’ appetite for risk, with many favoring lower-risk investments.
The report said retail investors typically wanted to place only about 22% of their investment portfolio in higher risk/higher return assets, such as equities.