What does it take to spook retirement investors?
The Annuity Man
Michael Fischer's article in ThinkAdvisor looks at a survey on what it takes to spook retirement investors. Below is an interesting excerpt from Michael's article.
"MagnifyMoney, a LendingTree subsidiary, in October asked 740 Americans with a retirement savings account what percentage decline they could tolerate before abandoning stocks. Nineteen percent of respondents said they would tolerate no more than a 5% market decline before giving up on stocks for retirement, even though slightly larger declines are becoming commonplace in today’s market, according to MagnifyMoney. A third of investors in the survey said they could tolerate up to a 10% market decline before they would take their money and run. Only 22% of investors said they would leave their retirement funds in the stock market no matter how large a decline."
With the current virus hysteria and subsequent market volatility, many Americans are honestly assessing how much risk they want to shoulder going forward...and how much risk they might need to transfer. As we all get older, the logical investment progression should be to transfer risk. However, there's one big hurdle that gets in the way.
Greed. The addiction to chasing returns. This gambling type addiction that the stock market feeds into is real.
I was around in 2008 for that "event," and even the one before that. Every time people tell me that they won't ever get blindsided like this again. Heard that before, and I will hear it again this time. People always have short memories when it comes to the stock market.