Most Believe Market Volatility Will Increase Regardless of Election
Outcome
NEW YORK--(BUSINESS WIRE)--
Nearly two-thirds (63%) of Americans say the upcoming Presidential
election has impacted their investment decisions over the past year,
with many increasing their allocation to cash, according to a new
Investor Pulse survey released today by BlackRock (NYSE: BLK).
This Smart News Release features multimedia. View the full release here:
http://www.businesswire.com/news/home/20161013006072/en/
(Graphic: Business Wire)
Three quarters believe the 2016 election will have a greater impact on
their personal finances than the 2008 election, the last time that there
was no incumbent President on the ballot, and about one-third feel the
election poses a threat to their financial future. But at the same time,
more fundamental factors are considerably higher than the election on
their list of perceived threats, including the high cost of living
(52%), healthcare costs (46%), Social Security changes (40%), and the
state of the American economy (36%).
The BlackRock survey examined the investing attitudes and behaviors of
1,633 Americans (including 1,440 investors), with a special focus on how
the pending election is shaping views of the current investment
environment.
“It’s clear that many Americans view the election as a source of
uncertainty, making them less comfortable about investing,” said Robert
Kapito, President of BlackRock. “Good investment decision-making hinges
on recognizing that short-term events often do not dramatically alter
the long-term trends that truly determine an investor’s ability to
achieve long-term goals.
“Regardless of how they choose to respond to election uncertainty,
investors are well advised to make sure that their portfolios remain
aligned with all of the realities that will really shape their financial
future no matter who occupies the White House,” he said.
Most Americans Positive About the Future
This year, just over half (52%) of Americans feel positive about their
financial future; 46% are confident that they are making the right
savings and investment decisions. As in other years, respondents who
work with a financial advisor are significantly more confident than
Americans generally (71% vs. 46%). Just over half of respondents (52%)
said that volatility in the markets this year has made them more
interested in professional advice.
Nearly two-thirds of Americans (63%) believe the Presidential election
will have a great deal of impact on the US economy, and about six in 10
(59%) indicate that the potential impact on their savings and
investments will be an important factor in how they vote.
When it comes to portfolio decisions over the past year in the run-up to
the election, Americans are most likely to have increased their cash
deposits or savings accounts (23%), and more than half (53%) of
investors have only increased their cash allocations and not
other investment products. Americans who have only increased
their cash tend to be more concerned about political and financial
instability than investors who have increased other allocations in
addition to their cash, the survey indicates.
Americans Say Volatility Will Increase No Matter Who Wins
Yet, the survey results also indicate that Americans are more focused on
the phenomenon of the election itself rather than the impact of one
candidate or the other when it comes to market conditions and their
investing strategies.
Almost three quarters of Americans (71%) feel that regardless of who
wins the election, market volatility will continue to increase. Also,
regardless of whether Americans anticipate a win by the Democratic or
the Republican candidate, the changes that they anticipate making to
their portfolio are roughly similar. For example, 16% of Americans would
increase stock allocations following either a Democratic or a Republican
win; bond allocations would go up for 13% of Americans following a
Democratic win and 12% of Americans following a Republican win.
“Recent market events have understandably tested the resolve of many
Americans, but the most confident investors are those working closely
with their financial advisors and focused on the long-term,” Kapito
said. “As history has shown, the key to reaching financial goals is to
stay engaged with your investments and adhere to your chosen strategy.”
Not surprisingly, both Republicans and Democrats think their own
candidates would be better for the economy and investments. For example,
among Democrats, 70% say a Democratic administration would be better for
economic growth; 66% of Republicans say the same regarding a Republican
administration. However, “independents” generally think election
outcomes will be similar regardless of the winner; for example, when it
comes to which candidate will be better for economic growth, 34% of
independents pick the Democratic candidate, and 32% the Republican.
Election Impacts Vary by Generation
Millennial-era Americans are more positive about their financial future
(63%) and more confident in their savings and investment decisions (54%)
than respondents generally.
At the same time, Millennials (79%) as well as Gen X-era Americans (71%)
are more likely to say that the election has impacted their investment
decisions over the past year, and also that the potential impact on
their investments will be an important factor in their vote (66% and
65%).
Of all Americans, Millennials are most likely to have increased
allocations in their portfolio across the board as a result of the
election, instead of just increasing their cash allocation, followed by
Gen Xers.
Retirement: Investors Concerned About Volatility’s Impact
Retirement remains an overriding concern for Americans. About six in 10
(62%) say that volatility has made them less certain about their
retirement prospects, with women even more uncertain than men (65% vs.
58%).
Four in 10 Americans see changes to Social Security as a potential
threat to their financial future, and 32% are concerned about running
out of money in retirement.
But at the same time, if their taxes were to decrease, less than half of
Americans say they would put their extra money toward either an increase
in their retirement plan defined contribution (43%) or a specific saving
or investment to fund retirement (46%). Most would use extra money to
increase their cash savings (77%) or pay off debts (62%). Of all
Americans, Millennials are most likely to say they would use the money
to invest in an independent retirement account, such as an IRA (59%), or
increase their contribution to an employer-sponsored retirement account,
such as a 401(k) plan (62%).
Three-quarters of Americans (76%) believe that the President has an
important role in ensuring financial security in retirement; Democrats
(78%) and Republicans (81%) do not significantly differ on this issue.
What Should Investors Do?
Take the Long View and Be Wary of Big Shifts: Regardless
of who wins, investors should think twice about making big shifts in
their portfolio. Most people’s investment horizons are longer than they
think – often several decades.
Prioritize saving for retirement: Research shows that if
people know how much to save for retirement, they save more. The first
step is to know the retirement income you want and the savings you need
to get there.
Opportunities do exist for investors to put their cash to work;
diversifying is key: Investors should explore opportunities to
take cash off the sidelines, including taking a global view when
thinking about asset classes or investment strategies.
Consider professional guidance: If you feel you need
assistance, consider working with an experienced financial advisor.
Please visit www.blackrock.com/investing/insights/preparing-for-the-election
for more information.
About BlackRock
BlackRock is a global leader in investment management, risk management
and advisory services for institutional and retail clients. At June 30,
2016, BlackRock’s AUM was $4.890 trillion. BlackRock helps clients
around the world 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®. As of June 30, 2016, the firm had approximately 12,700
employees in more than 30 countries and a major presence in 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 https://www.blackrock.com|
Twitter: @blackrock_news
| Blog: www.blackrockblog.com
| LinkedIn: https://www.linkedin.com/company/blackrock
About the Investor Pulse Survey
The Investor Pulse Survey examines attitudes and behaviors in the United
States. Over 1,600 Americans were surveyed in August 2016. The survey,
which was conducted by TNS, a leading market research information firm,
has a margin of error of +/- 2.45 percent.
GMC-0197
View source version on businesswire.com: http://www.businesswire.com/news/home/20161013006072/en/
Media:
BlackRock
Jessica Greaney, 212-810-5498
jessica.greaney@blackrock.com
Source: BlackRock