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How Have Investors Responded to the Covid-19 Pandemic?

how have investors reacted to covid 19 pandemic

There is no doubt that the pandemic has broad public health and economic impacts for millions of people.

From employment taking a hit and emergency funds being tapped to working-age and retirement-age households pivoting financially to deal with the unexpected, the effects have been widely felt.  

While a lot has happened in 2020, many people actually expected some sort of reversal in financial markets and economic conditions back in 2019, a survey found earlier this year.

According to Spectrem Group, an investor research firm, one of the biggest fears for investors in 2019 was a market downturn and ensuing economic downturn. While this didn't happen then, the novel coronavirus pandemic brought it about in 2020.

A record-breaking market downturn and economy shutdown sparked fears of a recession. Since then, markets have recovered.

But investors continue to worry about the long-term effects of the recession that has hit the United States and other parts of the globe.

What Did Investors Think Would Happen?

At two points, Spectrem Group asked investors different questions about coronavirus and its economic impact. The first time was in April, during the height of the pandemic, and the second time in May, by which time some states had started reopening.

When asked if they agreed with the statement "because of coronavirus the U.S. will go into a recession," 74% agreed. That number declined to 71% in May.

Among those who responded regarding an upcoming recession, 79% of Gen Xers said yes in April. By May, those who predicted a recession dropped to 71%.

Among those of the greatest generation, the number increased. Back in April, 61% believed a recession was on the horizon. Meanwhile, that number rose to 67% of the World War II generation in May.

Baby boomers were also concerned about the possibility of a recession as Gen Xers were. In April, 75% said they predicted a recession, and moving forward to April, those among recession-wary baby boomers dropped a few points to 72%.

More on the generational breakdowns can be seen in the image below, provided by Spectrem Group:

corona recession april may
Source: Spectrem Group, Investor Research Study, source link here. This content is copyright of Spectrem Group, all rights reserved.

How Did People React Financially to the Pandemic?

This survey also reflected some findings in another survey of investors by Spectrem Group. This study included investors with net-worths from $100,000 to $25 million. Of those with net-worths of $100K to $5 million, 10 to 16 percent reported that they had sold some of their equity holdings since March 20.

Not only that, 12 to 24 percent of them reported buying stocks since March 20. Four to eight percent of those with net-worths in this range reported buying bonds since March 20.

In addition, 4 to 14 percent of them reported selling bonds after that date. But two-thirds of those respondents said that they made no changes in their portfolios.

What Are the Takeaways?

The takeaways? First of all, don't panic. If you have some time until your retirement, you may have some time for recovery.

Large groups of people left their portfolios alone. Many have seen recoveries or near-recoveries since then.

Among those who made changes in their portfolios, there were changes reported at all levels of net-worth in the study. So, these conditions are clearly having a large impact across the board.

Secondly, if you aren't already working with a financial professional, you might consider so now. An experienced guide can help you assess your situation, evaluate your current progress, and recommend steps to adapt to this situation.

How Can a Financial Professional Help My Situation?

A good advisor can also do a lot to help you reach your goals. They can see things in the markets that you probably can't.

They have the knowledge and wisdom that comes with having been through prior tough market cycles. They have helped other clients through such times. You can put that expertise and knowledge to work for your peace of mind.

A good financial professional will also have a solid working knowledge of different products in the market -- and how they blend together in an overall financial strategy. Their knowledge base can help you save time, money, and the pains of trial-and-error.

Your advisor can help you to craft a financial plan that is sensible and balanced. They can also help you to stay on track with your plan during future periods of market turbulence.

Finding the Right Guide for Your Goals

No matter where you are in your retirement planning journey, help from the right financial professional can make a big difference. Many studies have shown that working with an experienced one can bring higher retirement savings, better retirement security, and a better sense of overall wellness.

If you are looking for a financial professional to guide you, help is just a click away at SafeMoney.com. Use our "Find a Financial Professional" section to connect with someone directly. Should you need a personal referral, call us at 877.476.9723.

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