Personal Finance

Survey: 38% of Investors Pulled Money From the Market Over Past Year

When it comes to the economy, the stock market, and other financial matters, there’s certainly been no shortage of news lately. And while some of these stories may not directly impact everyday Americans, they can still lead to a reaction from investors and others keeping a closer eye on such matters. Recently, MagnifyMoney commissioned a survey of more than 1,000 U.S. consumers to ask how current affairs had influenced their finances and decisions. 

First, 38% of investors surveyed reported removing some money from their stock positions due to current events. However, 40% of those same investors regretted their decision. Notably, younger investors were more likely to have pulled money from the markets, with 67% of Gen Z respondents and 57% of Millennials surveyed removing some of their money in the past year.

Beyond actively adjusting investments due to current events, 70% of respondents said that news and world events do factor into their financial decisions. Those making between $50,000 and $74,999 a year were even more likely to say as much (80%) as were Millennials (76%). As to which current events impacted consumer financial decisions the most, the top response was “inflation” with 63% — easily topping the second place response: the COVID-19 pandemic (51%). Economic policy (25%) and the war in Ukraine (19%) were also cited by respondents.

Of course, these impacts aren’t all negative. For example, 46% of those who said current events do influence their financial decisions stated that they are now placing a greater emphasis on building emergency savings.

Commenting on the survey results — in particular, the findings regarding pulling investments — LendingTree’s Chief Credit Analyst Matt Schulz said, “Time is the ultimate weapon when it comes to investing. It gives younger investors a huge advantage over their older counterparts. Unfortunately, however, Gen Z and millennials risk squandering that advantage if they pull their money out of the market when times get tough.”

Schulz went on to advise, “Their best move is to stay focused on the future, leave their money in the market, ride the wave and trust that better times are ahead because history has shown that when it comes to the stock market, they almost always are.”

With the stock market currently proving volatile, the Federal Reserve eyeing interest rate hikes, and other worldwide factors leading to economic uncertainty, it’s understandable that American consumers may feel the need to take action. Unfortunately, these reactions may not always be in their best interest long-term. Hopefully, with time, investors can learn from their mistakes and prevent repeating them in the future. Meanwhile, although realizing the importance of an emergency fund is definitely a good thing, let’s hope the consumers in question don’t need to utilize them anytime soon.