Investors Have a Low Tolerance for Stock Market Declines, According to MagnifyMoney Survey

Many investors can’t stomach minor dips in the stock market, according to the latest survey by MagnifyMoney, a LendingTree company, and as evident in the market drops driven by coronavirus fears.

The report revealed 19% of investors said they would tolerate no more than a 5% market decline before giving up on stocks for retirement.

“Volatile markets can make us feel uncertain or scared about the future, and our survey shows that many Americans’ first instinct is to flee with their money, locking in a loss which may leave them out of potential market rebounds and meaningful gains,” said Josh Rowe-Heupler, general manager of investing for LendingTree/MagnifyMoney. “Anxiety around the stock market is normal, but that doesn’t mean investors should automatically act on those emotions.”

“One of the best ways to combat fear in the midst of uncertainty is to stick to your financial plan or reach out for help from a professional,” Rowe-Heupler added. “A financial advisor can be an excellent resource to help keep consumers from making decisions that they may later regret.”

Key Findings:

Nearly 1 in 5 investors would tolerate no more than a 5% market decline before giving up on stocks for retirement, despite slightly larger declines becoming commonplace in today’s economy.

An additional 33% said they could handle up to a 10% market decline before abandoning stocks.

Only 22% of investors said they would leave their retirement funds in the stock market, no matter how large a decline.

Baby boomers are more willing to stomach a stock market decline than younger investors. Almost 4 in 10 investors in the 55–74 age group would stick with the market despite any decline, nearly three times the amount of millennials (16%) and Gen Xers (18%) who said the same.

Republicans have a higher tolerance for stock market declines than Democrats. A quarter of politically conservative investors said a decline would never cause them to give up on stocks for retirement, compared to just 19% of Democrats.

Parents of children under 18 aren’t as willing to stay in a declining stock market: Just 13% would keep their retirement savings in the stock market no matter the decline, versus about 30% of investors with adult children or who do not have children at all.

Find out more at www.magnifymoney.com.

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