Most Believe Market Volatility Will Increase
Regardless of Election Outcome
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).
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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
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version on businesswire.com: http://www.businesswire.com/news/home/20161013006072/en/
Media:BlackRockJessica Greaney,
212-810-5498jessica.greaney@blackrock.com
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