Risk aversion was on investors’ minds as they looked forward to the new year, according to new research released Thursday from Kiplinger’s Personal Finance magazine and Personal Capital, a digital wealth management company.
Investors in a fourth-quarter survey expressed fear of market volatility, and said they were stockpiling cash and thinking about reducing investments in stocks and even putting off retirement.
“While most people saving for retirement need to increase their stock holdings to reach their savings goals, many who were scarred by the Great Recession are now nervous about the economy and the bull market’s longevity,” the magazine’s editor, Mark Solheim, said in a statement. “They want to reduce their risk as much as possible.”
At the same time, most investors surveyed said they understood the value of having a long-term financial plan to get them through the stock market’s ups and downs.
The poll was conducted in mid-October among 850 respondents across the country. Participants were evenly split by gender and had a minimum age of 40, a minimum $50,000 annual household income before taxes and a minimum $100,000 combined household net worth, excluding primary residence.
“This survey shows that market volatility is a genuine concern for investors, especially those who are nearing retirement age,” Solheim said.
Investors worried about a bear market said they were considering several actions.
Respondents reported that they were currently holding about 18% of their portfolios in cash — nearly six times the average of 3% to 5%, according to the researchers. Fifty-three percent said they would increase their holdings in traditional savings accounts in order to counter market volatility.
Some 47% of respondents said they would consider reducing investments in stocks to combat market volatility, and four out of 10 of these said they would consider reducing stock holdings to 25% or less of their portfolio.