Investors are falling short of what they expect their ideal investment amount to be, shows findings from the SoFi Invest Midyear Investing Report.
The report, which examines investor sentiment and investing trends, finds 48% of individuals are becoming more conservative in their investment choices as they anticipate a possible recession. Gen Zers, found to be the most optimistic in the study, also indicated being more cautious than before in their investments (57%).
Gen Xers were found to feel the most underinvested, at 64% of respondents, compared to Millennial (59%) and Gen Z (52%) investors.
When asked what they are most concerned about, investors said their number one worry was not investing enough (38%), followed closely by being too conservative in their strategy (29%), and missing out on current buying opportunities (28%).
Still, over half (52%) of investors report feeling confident in their investment decisions, and even those who aren’t feeling fully secure report feeling at least somewhat confident (44%).
Investors continue to dabble in crypto
SoFi’s survey took a look into where investors are allocating their dollars to, finding that most are favoring equities (54%). Cryptocurrency still ranked number two (44%), despite a shocking downturn at the end of 2022 that saw bitcoin and other cryptocurrencies plummet.
Mutual funds rounded out the top three (38%), followed by bonds (27%) and exchange-traded funds (ETFs) (21%). Index funds (16%) and real estate (16%) both came in last.
SoFi notes that most investments were “largely influenced by generational factors,” as Millennials were over three times as likely as Baby Boomers to invest in crypto.
When asked where they are going to invest next, investors noted higher interest in income-focused investments (54%) vs. growth investments (46%). While SoFi makes the point that older generations are likelier to look for income-focused investments, younger investors (55% of Gen Z and 56% of Millennials) beat their more seasoned counterparts (51% of Gen X and 52% of Boomers) when it came to prioritizing the search for income.
Robo advisors, financial professionals, or doing it alone?
While much of the advisory space debates the use of robo advisors versus working with a financial professional, more investors are choosing to go solo at managing their investments, despite most continuing to use robo advisors (39%) or financial advisors (46%).
Of those who are not currently working with a professional, most say it is because they prefer to manage their own money (20%). Seventy percent of investors who utilize a robo advisor also actively manage other investments outside of their work, and one-third invest separately from their robo-advisor for convenience, found SoFi.
When asked what would convince them to work with an advisor, over 70% responded “if they saw themselves reflected across the table.” This was especially true for younger investors, as 78% of Gen Z and 75% of Millennials reported being more likely to work with an advisor if they could relate to the professional.
Investors cautious of AI
Despite reports that claim investors will soon lean on artificial intelligence (AI) for their financial and wellbeing needs, SoFi notes that most will do so cautiously.
According to the findings, 26% of investors said they want to use AI tools for investing in the near-future and also believe AI will make investing easier. Fourteen percent said they’ve already used AI to invest, while another 14% believe AI will make investing more accessible to investors.
Yet, 19% of investors said they do not want to use AI for investing until there is more evidence of its success, and 20% said they do not trust AI to invest on their behalf. This was especially true among the Boomer population, as 40% reported a distrust in the technology.
Additional insights from the SoFi Invest Midyear Investing Report can be found here.
SEE ALSO:
- A Third of Investors Prefer Financial Advice from ChatGPT
- More Investors Shift Focus Back to Long-Term Planning
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
