Five years after the financial crisis, investors have become savvier, increasing retirement savings, decreasing debt and building emergency funds.
Fidelity Investments‘ “Five Years Later” study examines the attitudes and behaviors of investors since the financial crisis started in 2008.
When the crisis erupted, nearly two-thirds (64 percent) of investors reported they were either scared or confused.
Nearly half (47 percent) of respondents said their household lost significant assets as a result of the crisis – with an average loss of 34 percent at the lowest point.
Additionally, 17 percent said the head of their household lost a job and 35 percent of households experienced a large drop in income.
However, more than half (56 percent) made major strides to shift their financial mindset.
“Emerging from the depths of the crisis, many investors found resolve and started taking control of their personal economy,” said Kathleen Murphy, president of Personal Investing at Fidelity Investments.
Many increased contribution rates to a 401(k) or IRA, adjusted asset allocations or increased the frequency of financial discussions with family, she said.
“The silver lining of this crisis is that it spurred investors to reassess and take action to improve their finances,” Murphy said. “We have seen this firsthand with seminar attendance at our local branches nearly doubling since 2007.”
Here are other highlights from the “Five Years Later” survey of more than 1,100 investors:
- Increasing Savings Rates: Forty-two percent say they increased their contribution rates to their workplace savings plan, individual retirement accounts (IRA) or health savings account, and more than half (55 percent) now agree that they feel better prepared for retirement than before the crisis. Conversely, only 19 percent of investors who are still scared or confused increased their savings rate. As a result, fewer (34 percent) feel better prepared for retirement than before the crisis.
- Reducing Personal Debt: Forty-nine percent say they have decreased their personal debt, and nearly three-quarters (72 percent) say they have less personal debt now than they did before the crisis hit. Conversely, only 31 percent of investors who are still scared and confused say they reduced personal debt.
- Building an Emergency Fund: Forty-two percent say they increased their emergency fund, and 80 percent of these same respondents now say they have a better understanding of their finances than before the financial downturn. Conversely, only 24 percent of investors who are still scared or confused say they increased their emergency fund.
- Searching for Guaranteed Income: Sixty-four percent are more interested than before the crisis in guaranteed income products, such as annuities, to provide a steady cash flow in retirement.