Global survey across 23 countries reveals incredible sentiment despite multiple challenges including inflation, rates, and geopolitics
Inflation and interest rates at levels not seen in decades, stocks underperforming like it’s 2008, and bonds recording record losses; investors have plenty to be gloomy about.
But despite these multiple challenges and the impact of the war in Ukraine and ongoing economic uncertainty, individual investors around the world remain optimistic.
A new poll of 8,550 people in 23 countries by Natixis Investment Managers shows that 68% are positive on the state of their finances today – 30% are confident, 24% are prepared, and 15% feel fortunate.
Only one third of respondents are negative about their finances including 22% who are stressed, 7% who are depressed, and 3% who feel like they’ve failed.
However, with potential headwinds for investors, the report warns that irrational behaviour and costly mistakes could occur if investors’ knowledge gaps are exposed by worsening conditions.
With interest rates still rising in many major economies, the report highlights that many investors are not sure how this may impact their investments.
Many have also yet to reassess risks in their holdings of equities and how weaker performance should inform their return expectations.
Inflation remains a key concern of investors with almost two thirds expressing fear about higher everyday prices while 44% worry about a large, unexpected expense.
Savings impact
The cost of living means that saving has become more challenging and while three quarters of poll participants want to save more, only one third can do so.
Two thirds say that inflation has made it significantly harder to save for retirement and 68% say it has made them realise that they need professional advice with 91% saying their trust their advisor.
Knowledge gap
As part of the survey, respondents were quizzed about bonds and rates.
Just 2% of global investors (including 2% in Canada) correctly identified how bonds are affected by interest rates: present value goes down and future income potential goes up.
The expectation gap between the returns investors want and what their advisors believe they will get remains high.
Globally, investors’ long-term return expectations are for 12.8% while advisors think 9% is more likely – a 42% gap. But among Canadian respondents, investors expect 10.6% but advisors think 6.5% is more likely – a 63% gap. The expectations gap in the US was 123%.
