Wary investors are increasingly taking a rain check on any new stock market investments, according to the 2022 Q1 Quarterly Market Perceptions study by Allianz Life.
In March 2022, Allianz Life conducted an online survey of a nationally representative sample of 1,002 respondents ages 18 and older. Less than half (47%) said they think the economy will improve in 2022, down from 54% in Q4 2021 and 66% in Q4 2020.
Three-quarters of respondents (79%) said they worried that current world tensions will cause a recession, and 43% said they are too nervous to invest in the market right now, up significantly from 34% in Q4 2021, Allianz found. The vast majority of respondents (81%) said they expected volatility to continue in the market this year.
“People don’t like uncertainty when it comes to finances and that is exactly what we have experienced in the markets thus far in 2022,” Kelly LaVigne, vice president of consumer insights at Allianz Life, said in a news release. “Unfortunately, we’re seeing that the vast majority of Americans expect volatility to stick around this year and it is adding yet another layer of risk to manage within their financial portfolios.”
Allianz also gauged the level of anxiety increasingly prevelant among investors. In this latest study, 40% of respondents said volatility in the market was making them anxious about their nest egg, up from 37% in Q4 2021. Fewer people said they felt good about the market and are ready to invest now. Just a quarter (24%) said they are comfortable with the current market conditions and were ready to invest now, down from 29% last quarter.
Two-thirds of respondents (65%) said that given recent market volatility, they wish they had more of their retirement savings protected from market loss; 59% said they were looking to add more protection to their portfolio after the recent market correction; and 66% said they wish they could have locked in their gains during recent market highs.
“These concerns signal that many Americans need the assistance of financial professionals who can help them avoid making rash, uninformed adjustments to their portfolio,” LaVigne said in an email. “People also need to hear that simply not investing and keeping cash on the sidelines is risky, too.”
LaVigne said that while Americans may be worried about market volatility, they should cntinue to stick with their contributions to qualified accounts, especially company 401(k) plans with a matching contribution.
“Although people might be reluctant to invest and pull back from making contributions to their investment accounts, the worst thing they can do right now is to alter or stop their current retirement saving strategy,” he said. “If they pull back now, they may never put that money back into savings and could p[otentially miss out on a lot of growth via compound interest. Even worse, they may miss out on free money from their employer match.”
LaVigne said that persuading clients to have confidence in investing after the market has corrected or retracted is dificult. If compared to a retail environment, he said, investor behavior is similar to that of a store customer who places value on goods purchased at full price, rather than when they go on sale.