Americans Squeezed by Debt and Household Costs
NEW YORK--(BUSINESS WIRE)--
Five years after the sweeping economic crisis upended global markets,
most investors in the U.S. and worldwide remain risk averse, and hold a
sizable percentage of their assets in low- or no-return cash
investments, according to the first-ever Global Investor Pulse Survey
from BlackRock (NYSE:BLK).
Despite steady gains in recent years that have pushed some stock markets
to all-time highs, most people are not comfortable taking on more risks
to achieve better returns, according to the
global survey – one of the largest ever, spanning 17,567 investors
including 4,000 Americans, across a range of income levels. (For more on
the survey and its methodology, please see www.blackrock.com/investorpulse.)
The results reflect a global investment environment still plagued by
uncertainty, policy confusion and political dysfunction.
While affluent investors (those with more than $250,000 in investable
assets) expressed greater confidence about their financial futures, even
they - along with investors of all types around the world – tend to hold
a lot of cash, with no immediate plans to change their investment
mix. In the U.S., investors of all types held 48% of investable assets
in cash, with 18% in stocks and 7% in bonds. Equity ownership rates are
highest in Hong Kong and Taiwan, countries that also have high overall
rates of household savings.
And while many investors say earning income
is important to them, they aren’t certain how to do it: Nearly 50% of
affluent investors feel that income-generating investments are riskier
than they were five years ago, and the majority of both affluent and
other investors declined to describe themselves as “knowledgeable” about
the best ways to generate income in today’s markets.
“More than ever in a new world ushered in by crisis, people at all
income levels need answers on how to better manage their money for the
future,” said Robert S. Kapito, President, BlackRock. “They’re
understandably unnerved and are holding too much of their money in
assets that are earning them nothing or that will lose value if interest
rates rise. We need to let them know it is still possible for them to
achieve their retirement and other long-term goals but they need to take
action.”
High Debt and Bill Payments Hold Down Saving and Investment
While nearly half of U.S. investors were positive overall about their
financial futures, the other half of those surveyed expressed worries
ranging from "concerned"
to “nervous,” “pessimistic” and even “depressed.”
Notably, 58% of people who worked with a financial advisor—whether
affluent or not—reported feeling positive about their financial future.
Affluent investors were more upbeat, with 72% describing themselves as
positive, 78% saying they felt in control of their financial futures,
and 81% saying they were confident that they were making the right
savings and investment decisions.
Debt and bill payments appear to be contributing to the concerns of
average Americans and having a significant effect on the way they save
and invest. The percentage of take-home pay devoted
to living costs bills and debt is particularly high in the U.S.
(49%) compared to the global average (40%).
These costs translate into widespread personal savings deficits in the
U.S. Americans reported saving, on average, just 16% of their take-home
pay each month – compared with the global average of 18%. And when asked
what would encourage them to invest more of their cash savings, nearly
one in three (32%) respondents indicated “less personal debt.”
When individuals pinpoint key risks to their financial future, the
lingering fallout of the credit crisis and associated economic downturn
is evident. In the U.S., “healthcare costs" followed by “job security”
and “state of the U.S. economy” topped the list as respondents’ number
one concerns, and “having to spend more than I earn” was mentioned most
often among global respondents’ top three concerns (31%).
However, 43% of U.S. respondents said a modest earnings increase of $200
per month would encourage them to save more generally; 40% reported that
they would pay off more debt, and 26% resolved they would save more for
retirement specifically.
The Wisdom of Elders
Around the world and in the U.S., respondents say they have recently
spent more time planning a vacation (35%/27%), the purchase of a new
technology item such as a smartphone (25%/25%) and researching a car
purchase (23%/26%) than they have devoted to reviewing their retirement
plan (17%/20%).
Retirees responding to the survey would advise very different behavior
on the part of their younger peers. When asked with the benefit of
hindsight if there is anything they would have done differently,
retirees responded as follows:
-
I would have started investing for retirement earlier (36%)
-
I would have spent less money (32%)
-
I would not have changed anything (23%)
-
I would have worked for longer (21%)
-
I would have sought professional financial advice (12%)
The most mentioned retirement goal expected to be achieved in the U.S.
was continuing to do some paid work (39%) while global respondents
ranked frequent holidays and travel (45%) as the top goal.
About BlackRock
BlackRock is a leader in investment management, risk management and
advisory services for institutional and retail clients worldwide. At
September 30, 2013, BlackRock’s AUM was $4.096 trillion. BlackRock helps
clients meet their goals and overcome challenges with a range of
products that include separate accounts, mutual funds, iShares®
(exchange-traded funds), and other pooled investment vehicles. BlackRock
also offers risk management, advisory and enterprise investment system
services to a broad base of institutional investors through BlackRock
Solutions®. Headquartered in New York City, as of September 30, 2013,
the firm had approximately 11,200 employees in 30 countries and a major
presence in key global markets, including North and South America,
Europe, Asia, Australia and the Middle East and Africa. For additional
information, please visit the Company's website at www.blackrock.com.
About the Poll
One of the largest global surveys ever conducted, the BlackRock Global
Investor Pulse poll interviewed 17,567 respondents, in 12 nations: the
US, Canada, the UK, Germany, France, Italy, the Netherlands, Belgium,
Switzerland, Australia, Hong Kong and Taiwan. The US sample comprised
4,000 respondents. No income or asset qualifications were used in
selecting the poll's participants, making the survey a truly
representative sampling of each nation's entire population. Executed
with the support of Cicero Group, an independent research company, the
survey took place from Aug. 24 to Sept. 16. For both the global sample
and the US sample of 4,000 respondents, the margin of error is +/- 3%.
BlackRock
Jessica Greaney, 1-212-810-5498
Jessica.greaney@blackrock.com
Source: BlackRock