Fifty-three percent of Gen Z and millennial investors in a new quarterly survey from E-Trade Financial said their top concern during the coronavirus crisis was their investment portfolios, followed by 44% who cited their health and 43% who worried about their ability to afford day-to-day living expenses.
“To watch a nest egg’s value reduce drastically in almost the blink of an eye is enough to shake up anyone,” Mike Loewengart, E-Trade’s managing director of investment strategy, said in a statement.
“Millennial and Gen Z investors have primarily experienced the 10-year bull run in their investing lifetime so it’s understandable to see portfolio concerns bubble up, but it’s important to remember that time is on their side.”
E-Trade’s latest quarterly survey was conducted during the first week in April among an online U.S. sample of 940 self-directed active investors who manage at least $10,000 in an online brokerage account. The millennial/Gen Z dataset comprised 112 investors between the ages of 18 and 30.
Fifty-four percent of younger investors surveyed reported that they checked their portfolio at least daily, compared with 29% of the total population. In fact, 58% of investors under 30 said they checked their portfolios more frequently since the coronavirus pandemic.
Three in five younger investors expressed confidence that they were making the right decisions for their portfolios, compared with 38% of the total population.
However, confidence quarter over quarter dropped among both groups of investors, by seven percentage points for the former and 10 points for the latter.
“Those who are concerned about market volatility should remain grounded in their financial goals, keep their eyes on the long term, and stay diversified,” Loewengart said. “While these are no doubt unsettling times, they will run their course. I think we’re seeing some of this sentiment echoed in [younger investors’] unflagging market conviction.”
Investments in Turbulent Times
Loewengart had some suggestions for Gen Z and millennial investors concerned about their portfolio in the current environment.
The market doesn’t move in one direction. Although the recent sell-off was the fastest since the Great Depression, the S&P 500 is still up significantly from where it was even five years ago, suggesting the importance of keeping a long-term view.
Don’t try to time the market. While historical data can be helpful, it bears repeating that past performance does not guarantee future results. What goes down hard can come up strong and vice versa.
April’s impressive rally from the March low offers a good example. If investors had fled the exits at the bottom, they would have missed out on those gains. Stay committed to the portfolio you’ve worked so hard to build.
Diversification proves its mettle in this environment. As earnings season continues, it’s becoming clearer that the pandemic is not hurting all sectors equally — consumer staples and health care are thriving. A simple way to participate in the market’s various sectors is to be broadly exposed, which one can achieve through such instruments as index ETFs or mutual funds.