Recession Scars Are Still Scaring Investors Away From Risky Bets

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Photo: TD Ameritrade

More than a third of investors said they’ve shied away from risky investments over the last six months, according to a new survey released by TD Ameritrade. That’s 12 per cent more than the same survey issued three months ago, and most of the blame lies in a sluggish economy––both in the U.S. and overseas, says a firm representative.

“The slow recovery of the U.S. economy, Europe and its ramifications on global and domestic economies, and the political situation in the U.S. are all weighing heavily on the minds of retail investors,” said Tom Bradley, president of retail distribution, TD Ameritrade, Inc.

Whatever optimism consumers are beginning to regain hasn’t settled with investors, according to the survey. 40-seven per cent said they were optimistic about the U.S. stock market this time around, nearly 20 per cent fewer than those who were optimistic in April. 

The findings are echoed by the Investment Company Institute, which, according to NPR News, puts the rate of households with money in stock or mutual funds at 46 per cent, down from 59 per cent in 2001––a $70 billion dollar drop. 

Caution might be the trick of the trade as investors renew faith in their portfolios, but it’s important to know the right time get aggressive, notes U.S. News & World Report’s David Francis. 

As people become more comfortable with investing and as their wealth grows, many shift from a passive strategy to active investing,” he says, though it’s ideal to find a balance. Ask your portfolio manager to help come up with an asset-allocation system that leaves room for both––and keep it diversified.

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