First it was Nationwide and now Betterment, the industry’s clearly curious how 401k savers and investors are behaving 10 years after the recession.
The economy has certainly bounced back, but what about consumer confidence?
Unsurprisingly, it’s not so great, according to findings published in the Betterment Consumer Financial Perspectives Report: 10 Years After the Crash.
For instance, a quarter of people stopped contributing to their 401k or other retirement savings plan in the wake of the market downturn, and two-thirds of those who remained in the market scaled back the amount of money they were investing.
“A decade later, corporate profits are at record highs, the economy is logging its best performance in nearly four years and the stock market has more than quadrupled in value. However, for millions of consumers the scars are still raw, with 65 percent of respondents saying they have yet to fully recover financially, and the large majority reporting they remain distrustful of Wall Street,” Betterment noted in a statement.
In fact, more than eight in 10 Americans don’t believe Wall Street has become more ethical in the time since the recession. Around the same amount are just plain confused. They admit they don’t know what caused the market to crash in the first place, and they don’t understand what was happening as the crisis unfolded.
Others are completely misinformed, grasping onto unfounded perceptions that have been shaped by a decade of financial struggle. Half of those surveyed are under the impression the S&P 500 hasn’t gone up since 2008; around one in five actually believe it’s gone down.
Even though the average American lost less than $5,000, the majority report that they are investing less today than they were before the economy nosedived. But strangely, those who were investing the most and therefore lost the most 10 years ago are seemingly better recovered and more optimistic at this point.
Compared to non-investors, 41 percent of investors feel fully recovered today. Half are investing more than they were pre-crisis. A quarter even consider themselves to be more risk-tolerant today than they were back then.
“The data reinforced a lot of what we already feel and see on Wall Street: people are slow to trust big banks again, and understandably worried this will happen again. But what we find extremely hopeful is the staying power of those who rode the wave and came out on the other side,” Dan Egan, VP of Behavioral Finance and Investments at Betterment, said in a statement.
“People who were investing in 2008 felt the losses, but also witnessed the recovery. They know another dip is inevitable, but know that as long as they don’t get greedy or fearful, the rewards outweigh the costs.”