- Retail investor confidence has fallen, but 61% are still confident in their portfolios
- Investors are more defensive, holding cash and looking at utility stocks
- Retail investors are prepared to ride out storm, 55% hold investments for years or decades
HOBOKEN, N.J., Oct. 12, 2022 /PRNewswire/ -- One in three (37%) retail investors in the U.S. are reducing the amount they invest to help cover the cost of rising household bills, but sentiment for Q4 appears more bullish, according to the latest 'Retail Investor Beat' from social investing network, eToro.
31% of retail investors reduced the amount of money going into investments in the last three months. At the same time, retail investor confidence fell by 8 percentage points since last quarter, from 69% in Q2 to 61% in Q3.
While one in three (37%) of retail investors are cutting back on investments to pay for rising household bills, 33% are building cash to invest when markets look better and 30% are shoring up emergency savings.
Despite worsening market conditions eating into confidence, those looking to reduce the amount they invest in Q4 is expected to ease to 21%, with 79% either planning to invest the same amount of money or more over the next three months - suggesting retail investors are feeling less bearish about Q4.
"We're seeing some nervousness among individual investors. Some are tactically preparing for a recession through their sector preferences, and others are pulling back on investing to cover higher bills. High-rate, high-inflation environments can be painful, so it's no wonder investors are shifting their priorities." comments Callie Cox, US investment analyst at eToro.
"Still, the resiliency of retail investors has been admirable. This is a battle-tested market, and that can matter as we head into chapter two of this bear market. Investors are less confident, yet they're still planning to invest more in the fourth quarter, showing that there may be some hope building near the lows."
Inflation remains the biggest concern for retail investors for the second quarter in a row, with 28% citing it as the main risk to their portfolios, followed by the state of the US economy (24%).
Given these risks, many are pivoting to a more defensive stance, with those holding cash jumping from 42% to 64% in a year, while the number of investors holding utility stocks is set to rise 5 percentage points in the next three months (to 49%). Meanwhile, those retail investors with money allocated to the financial services and industrial sectors (both typically cyclical and non-defensive) are set to drop from 63% to 59%, and 49% to 46% respectively.
The data also shows that the majority of retail investors have a long-term mindset, with more than half (55%) looking to hold an individual investment for a time frame of years or decades, while just 3% identify as day traders. Supporting this, almost half of respondents highlight securing long term financial security as their main goal for investing.
"Investors are leaning on time because it's their most powerful advantage, especially in markets so far from their highs. Bear markets depend on perspective. To short-term investors, they can be a good reason to seek safety. But for those with time on their side, bear markets are just quality names at discounted prices.
Retail investors are becoming more educated and agile with their investments, and they've fared impressively well in this bear market. Investing conditions could stay tough, but some are starting to see some light at the end of the tunnel," adds Cox.
The eToro Retail Investor Beat study is a quarterly survey of 10,000 retail investors across 13 countries, including 1,000 retail investors in the US. This release focuses exclusively on US data. Details of the global findings can be found here.
Notes to editors
This release focuses on US data only. It forms part of eToro's quarterly Retail Investor Beat. Details of the global findings can be found here.
The Q3 2022 Retail Investor Beat is a survey of 10,000 retail investors across 13 countries and 3 continents. The following countries had 1,000 respondents: UK, US, Germany, France, Australia, Italy and Spain. The following countries had 500 respondents: Netherlands, Denmark, Norway, Poland, Romania and the Czech Republic.
The survey was conducted from September 16 to 28 2022 and carried out by research company Appinio. Prior to Q2, 2022, previous waves were conducted quarterly in conjunction with Opinium.
Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users.
firstname.lastname@example.org / email@example.com
eToro is a social investing network that empowers people to grow their knowledge and wealth as part of a global community of investors. eToro was founded in 2007 with the vision of opening up the global markets so that everyone can trade and invest in a simple and transparent way. Today, eToro is a global community of more than 30 million registered users who share their investment strategies; and anyone can follow the approaches of those who have been the most successful. Due to the simplicity of the platform users can easily buy, hold and sell assets, monitor their portfolio in real time, and transact whenever they want.
eToro is regulated in Europe by the Cyprus Securities and Exchange Commission, authorised and regulated by the Financial Conduct Authority in the UK and by the Australian Securities and Investments Commission in Australia.
This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient's investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.
eToro AUS Capital Limited is authorised by the Australian Securities and Investments Commission (ASIC) to provide financial services under Australian Financial Services Licence 491139. Stocks are offered via eToro Service ARSN 637 489 466 promoted by eToro AUS Capital Limited ACN 612 791 803 AFSL 491139. Capital at risk. See PDS. Zero commission does not apply to short or leveraged positions. Zero commission means that no broker fee has been charged when opening or closing the position. Limited stock exchanges only.
This communication is general information and education purposes only and should not be taken as financial product advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial product. It has been prepared without taking your objectives, financial situation or needs into account. Any references to past performance and future indications are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.
Securities trading is offered by eToro USA Securities Inc., member of FINRA and SIPC, a self-directed broker-dealer that does not provide recommendations or investment advice. Content, research, tools, and stock symbols on eToro's website are for educational purposes only and do not imply a recommendation or solicitation to engage in any specific investment strategy. All investments involve risk, losses may exceed the amount of principal invested, and past performance does not guarantee future results. Cryptotrading is offered by eToro USA LLC. Cryptocurrency holdings are not FDIC or SIPC insured. Visit our Disclosure Library for additional important disclosures. FINRA Brokercheck © 2022
These press releases may also interest you