A new study from The Balance indicates that 39% of investors are buying more cryptocurrencies amid market volatility, as Americans change their investment and saving habits in light of poor economic forecasts.
Key Takeaways
– 40% of investors are increasing their investments amid market fluctuations.
– Three in five are turning to safe investments.
– 14% are reducing their investments due to a lack of funds.
– Nearly half of investors under 41 are buying more cryptocurrencies.
Changes in the Investment Market
At the same time, 41% of investors say they are increasing their stock investments in response to the current market, possibly due to the ability to “buy the dip.” Another 34% say they are making no changes to their investment contributions.
The Balance conducted a survey of investors between June 30 and July 9, when the markets rose by just over 2%.
On the other hand, more than a quarter of the surveyed investors said they are investing less. About 15% said they are reducing investments due to a lack of funds, while 9% pointed to inflation concerns. Another 9% told The Balance that they want to hold more cash amid potential recession risks.
Since the beginning of the year, markets have declined by more than 14%, even slipping into what is known as a “bear market” in June. Investors have been concerned about persistent inflation at its highest level in 41 years, putting increasing pressure on the Federal Reserve to raise interest rates to curb inflation.
Although investors are buying more assets, that doesn’t mean they are sticking to the same investment strategy. The majority of surveyed investors – 60% – said they are opting for safe investments to help them ride out the volatile markets.
While 41% of the surveyed investors are choosing to buy more stocks, about a third of them are increasing purchases of both ETFs and index funds, which tend to be less volatile.
It is not surprising that younger investors are the most likely to turn to cryptocurrencies during this uncertain economic period. About half of millennial and Gen Z investors (those aged 41 and under) told The Balance that they are leaning toward cryptocurrencies, compared to less than a third of Generation X or older generations.
The Impact of Inflation on Saving
Inflation is not only affecting investment habits but also how Americans are saving. More than a third of respondents said they are saving less, compared to 28% who are saving more. Nearly a quarter of them are reducing debt repayments, a rate that matches the proportion of those who said they are increasing debt repayments. Half of the respondents stated that they are making no changes to their debt commitments.
Investing during a bear market can be challenging, but there are ways to protect your assets from market volatility. Low-risk investments like bonds can be beneficial – as bonds historically perform well during bear markets – while investing in index funds and ETFs is a great way to mitigate risks if you want exposure to stocks. Don’t forget that bear markets provide opportunities for younger investors to buy stocks they wish to hold long-term at lower prices.
Study Methodology
The Balance conducted the survey among 1,200 Americans from June 30 to July 9, 2022. Survey participants were selected to respond to an online questionnaire from a market research provider. To qualify, survey participants must be 18 years or older and must have managed their own funds to some degree. Quotas were used to ensure national representation by gender, race, region, and generation, using U.S. Census estimates for 2019 as a benchmark. Quotas were also used to match national representation of political affiliation using the Pew Research Trends Panel for 2022 as a benchmark.
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Source: https://www.thebalancemoney.com/39-of-us-investors-buying-more-crypto-amid-volatility-6363332
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