What do baby boomers do when the market fluctuates?
Most of them do nothing, according to a new study from American Funds.
American Funds, a family of mutual funds from Capital Group, interviewed U.S. adults age 50 years or older who have at least $100,000 in investable assets and found that many make an investment plan and stick to it.
Of the total 1,035 respondents that participated in the survey, 69% are “long-term investors who understand market fluctuations are natural,” the report says.
This week alone has already seen its fair share of market fluctuations.
When asked about their general expectations over the next 10 years, many of these older investors said they expect it to go higher but with significant volatility.
According to the the survey, 58% expect the market to climb in the next decade, averaging single-digit annual returns or performing as well as the bull market of the past five years.
The survey finds that three in 10 investors are “bracing for a bumpier ride over the next decade,” with market corrections and a potential crash resulting in lower returns relative to historical averages.
“But these investors do not change their plans when the market fluctuates,” according to American Funds’ “The Wisdom of Experience” report. “The long-term focus holds true across all the investors we surveyed, with older, wealthier and male investors voicing the most commitment to sticking to a long-term plan and strategy,”
Interestingly, the survey finds that wealthier investors are more likely to stick with their investment plan than those with less wealth.
According to the survey, 76% of the investors with $1 million or more in assets stick to their investment strategy – which is more than people with $500,000 or more in assets (68%) and more than those who have between $100,000 and $500,000 in assets (58%).