After the stock market turmoil of 2008 to 2009, what did one of the largest mutual fund companies in the world, Vanguard, find in its survey of over 3,000 U.S investors, age 21 to 79?
In a short period of time, from May-June 2009, experts at Vanguard surveyed U.S. investors, finding that three-quarters of all American households with $5,000 or more to invest, invest a portion in equities. Overall wealth and educational level attainment are related to a household's participation in investing, as is the age of the investor. Investors who are at or near retirement age have less exposure and are therefore less likely to hold equities than
Of Americans who had money in equities during the stock market correction of 2008-09, 60% kept their money where it was, 21% reduced their exposure to equities, 17% increased their investment, and 5% sold all their equities.
are younger investors. The survey also found that even during the correction in 2008 to 2009, 60% of investors stayed the course without making major changes to their investments; 21% of investors reduced their exposure to equities; 5% sold all their equity holdings; and 17% saw the correction as an opportunity to increase their investments in equities. Some reasons for this dynamic may include how near investors were to reaching retirement age during this period of turmoil, their individual mortgage financial position at the time, and whether their jobs were secure.
What other insights does the Vanguard study show about investor attitudes?
The Vanguard study makes some interesting conclusions from the results of its survey, including that investors who are more dependent on the work of financial advisers and those who invest only in tax-deferred retirement plans are less likely to panic. Fully three-quarters of survey respondents were strongly or somewhat aware that large market declines are possible. Half of all respondents felt the risks inherent to investing were worth taking in order to realize long-term gains. Another 50% of respondents felt that during this period of time the stock markets were riskier than in past years. Many respondents also felt their retirement was somewhat impaired by the "crash", and their responses were tied to similar factors, including how near they were to retirement, how secure they felt in their current job or career path, and their housing/mortgage situation.