Investors are putting less into the stock market to pay for everyday essentials


SAN FRANCISCO–(BUSINESS WIRE)–Despite their willingness to invest, current market conditions have more than three-quarters (77%) of investors worried about market fluctuations and two-thirds (66%) saying they’re worried about their money, according to a new study by Wells Fargo & Company.

Investors are so nervous that two in five (42%) admit they want to cash out their investments, and more than one in four (29%) would cash out their IRA or 401(k) investments if they could do so without penalties tax.

Inflation is squeezing household budgets, with a quarter of Americans with money in the stock market investing dollars in necessities like groceries, gas and housing. One in four (25%) invest less in the stock market because they have to budget their money for everyday household expenses.

The five main budget areas requiring cash are:

  • Grocery (58%)

  • Transportation and gasoline (47%)

  • Utility bills (42%)

  • Debt (39%)

  • Housing (34%)

Two-thirds of investors say they doomscroll or continually check their investments on their phone when the market is down. 27% of women surveyed and 50% of men check the value of their investments several times a week.

Americans with money in the stock market see inflation as the biggest threat to their investments, with two-thirds (65%) saying lower inflation would make them feel more confident. More confidence would also come from the fall in interest rates (44%); lower gasoline prices (41%); the end of the war in Ukraine (35%); a change in US policy (34%); ending US labor shortages (20%); and a cure for COVID-19 (15%).

“Uncertainty on so many levels can cause people to focus on their current selves, or their immediate needs and circumstances – and lose sight of their future selves, or more strategic priorities like preparing for retirement,” said Michael Liersch, head of advice and planning. in Wells Fargo’s Wealth & Investment Management business. “The irony is that this is the time when we need to maintain balance between our present and future selves, and potentially even dedicate more, not less, to our future selves.”

“When you take money out of your retirement accounts, you’ve blocked out market declines. When you hold your money in cash, you’re giving up potential future investment returns. Staying balanced in your approach can help you achieve the short and long term financial success. Saving and investing is not a switch that you turn on and off, it is best thought of as a dimmer switch that you should regularly review and increase or decrease according to your current and future needs” , did he declare.

Investor knowledge is key to participation rates

Along with inflation, another barrier cited to keep people wary of the market is lack of investment knowledge, with less than half (44%) feeling confident they know where to invest. in the current market. Even fewer (40%) would give themselves an A or B grade in terms of investment knowledge.

More than a third of all Americans (36%) have no money in the stock market. Among Americans without money in the stock market:

  • Two in three (68%) say they don’t want to risk their money

  • Three in five (61%) think it’s not worth investing without a lot of money

  • Half (50%) cite lack of knowledge as a barrier to investing

  • A quarter (27%) think making money in the stock market is mostly a matter of luck

The study also found that many investors (57%) feel overwhelmed with investment options and need advice. Two-thirds (66%) want a second opinion from other people before buying or selling an investment. Although financial advisors, financial institutions and family are the primary resources investors turn to for advice, these resources vary across generations.

  • Gen Zers turn to family (50%), followed by social media sites such as YouTube and TikTok (44%)

  • Millennials rely heavily on family (52%)

  • Gen Xers and Baby Boomers say financial advisors are essential (46% and 55%, respectively)

  • One in ten investors (10%) believe they have no one to turn to for financial advice

“When people think of the younger generations, they often think of them as do-it-yourselfers,” Liersch said. “Our data shows that nothing could be further from the truth. Human beings not only want advice from their device – whether on YouTube or TikTok – but also from human beings, regardless of age.

“Whether it’s family or a financial adviser, they try to turn to someone for help. Digital advice allows the flow of information to inspire them to use their money more wisely or to verify and validate what they have heard from others. It also helps people bring their ideas to life quickly and efficiently, whether on their own, with a professional advisor, or both. That said, it seems people still appreciate human advice.

Some see an opportunity and will find money to invest

At the other end of the spectrum, almost one in five investors (18%) want to take advantage of the market downturn and free up money in their budget to invest more. The top five budget areas where investors are cutting back to invest more are:

  • Entertainment (55%)

  • Personal expenses, such as clothing (46%)

  • Restaurants (45%)

  • Travel and vacation (36%)

  • Online subscriptions (28%)

About the study

Versta Research conducted a nationwide online survey of 2,000 American adults, 1,163 of whom have invested money in the stock market. The survey was conducted September 21-27, 2022. Sampling was stratified and final data weighted to match current US Census estimates for the adult population based on age, gender, race/ethnicity, region, income and education. Assuming no sample bias, the maximum margin of error for full-sample estimates is ±2% overall and ±3% for those with l money in the stock market (investors).

About Wells Fargo Wealth & Investment Management

Wells Fargo Wealth & Investment Management (WIM) is a division of Wells Fargo & Company. WIM provides financial products and services through various banking and brokerage subsidiaries of Wells Fargo & Company and is one of the largest wealth managers in the United States, with over $1.8 trillion in assets. customer assets. WIM provides customized wealth management, brokerage, financial planning, lending, private banking, trust and trust products and services to high net worth, high net worth and ultra high net worth clients. WIM operates through advisors at Wells Fargo Advisors, independent brokerage offices and digitally through Intuitive Investor® and WellsTrade®, as well as through advisors at The Private Bank and other banking centers.

Wells Fargo Private Bank provides products and services through Wells Fargo Bank, NA, Member FDIC, and its various affiliates and subsidiaries. Wells Fargo Bank, NA is an affiliate bank of Wells Fargo & Company.

Brokerage services are offered by Wells Fargo Advisors. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, SIPC members, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company. Intuitive Investor® and WellsTrade® accounts are offered through Wells Fargo Clearing Services.

Wells Fargo Investment Institute, Inc. is a registered investment adviser and a wholly owned subsidiary of Wells Fargo Bank, NA, an affiliate bank of Wells Fargo & Company.

Wells Fargo Bank, NA offers a variety of advisory and fiduciary products and services, including discretionary portfolio management. Wells Fargo Affiliates, including Financial Advisors of Wells Fargo Advisors, a separate non-bank affiliate, may receive an ongoing or one-time referral commission in connection with customers referred to the bank. The bank is responsible for the day-to-day management of the account and the provision of investment advice, investment management services and wealth management services to clients. The financial advisor’s role with respect to the Bank’s products and services is limited to referral and relationship management services. Some of The Private Bank experiences may be available to Wells Fargo Advisors clients not affiliated with Wells Fargo Bank, NA

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a leading financial services company with approximately $1.9 trillion in assets, proudly serves one in three American households and more than 10% of small businesses in the United States, and is a leading provider of middle market banking services. in the United States We offer a diverse set of banking, investment and mortgage products and services, as well as consumer and commercial finance services, through our four reportable operating segments: Banking Consumer Services and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. Management. Wells Fargo ranked No. 41 in Fortune’s 2022 ranking of America’s largest companies. In the communities we serve, the company focuses its social impact on building a sustainable and inclusive future for all by supporting housing affordability, small business growth, financial health and a low-carbon economy. carbon.

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