Bull Market Blues: 70% of Investors Have Regrets for 2019

Regrets in 2019 could turn into resolutions in 2020, at least when it comes to investing strategy. Seven in 10 investors (70%) — defined as Americans who currently have money in investment accounts — wish they had done something differently this year to increase their return on investments for 2019, according to a new NerdWallet survey. And many intend to make changes to their investing plans in the new year.

In a recent online survey of more than 2,000 U.S. adults, among whom about 1,200 are investors, commissioned by NerdWallet and conducted by The Harris Poll, we asked Americans about investing changes they made in 2019, how they think a potential 2020 recession would personally impact them, and their investing plans for the new year.

Key findings

• Volatility inspires action: Close to half of investors (43%) made changes to their investing portfolio in 2019 due to stock market volatility, making three changes, on average.

• Recession fears loom over the new year: Nearly three-quarters of Americans (74%) think they would be personally affected by a recession if one occurred in 2020. The biggest effect they think they’ll face is increased cost of living (63%), followed by needing to tap into emergency savings to pay for necessities and not being able to pay their bills on time (31% each).

• 2020 election could have an effect: About half of investors (48%) think the 2020 U.S. presidential election will have a positive impact on their investments, while 3 in 10 (30%) think it will have a negative impact.

• Investors plan to change strategy: Close to half of investors (49%) say the current economic climate will change their 2020 investing strategy — 1 in 5 investors (20%) plan to invest more aggressively, while 29% plan to invest more conservatively.

Investors wish they saved more in 2019

Movement in the stock market inspired many Americans to buy or sell stocks in 2019. More than 2 in 5 investors (43%) made changes to their investing portfolio this year due to volatility in the stock market. On average, investors made three changes, but 14% made five or more changes to their portfolio.

Numerous events this year competed for investors' attention: The Federal Reserve cut interest rates, several popular companies went public, the S&P 500 hit a record high and the trade war with China led to market turbulence. With so many variables, it’s difficult to make long-term investing decisions, and some investors wish they’d made different ones this year.

The majority of investors (70%) wish they had done something differently in 2019 to increase the return on their investments. The biggest regret? More than a third of investors (35%) wish they would’ve invested more money.

Millennial investors (ages 23-38) are more likely than older generations of investors to wish they had done something differently in 2019 to increase the return on their investments. Close to 9 in 10 millennial investors (85%) say this, compared with 76% of Gen X investors (ages 39-54) and 54% of baby boomer investors (ages 55-73).

What you can do in 2020 and beyond: Invest more, if you’re able. The best thing you can do to grow your money is save it early in your career. Those who begin saving later will have to save a lot more to catch up, but money put into investments in your 20s and 30s has many decades to grow before you hit retirement age. As for changing strategy due to market fluctuations, it’s important to remember that investing for the future is a long-term game.

“As long as your situation hasn’t changed — your goals, time horizon or risk tolerance — you shouldn’t make changes to your investments in response to market volatility,” says Arielle O’Shea, NerdWallet’s investing and retirement specialist. “Long-term investors have the benefit of time, and that gives you the ability to ride out market fluctuations.”

Many Americans are sitting on their cash

Plenty of Americans have money they could invest but chose not to do so in 2019. Nearly 4 in 5 Americans (79%) have money in savings that isn’t allocated for a specific purpose — $24,020, on average, though the median was much lower, at $1,500. Among them, almost 1 in 5 (18%) say they haven’t invested it because there’s too much market volatility, 14% say it’s because they are afraid to invest, and 14% don’t know what resources to use to make a good decision about what to invest in.

Despite the uneasiness with investing, many Americans feel good about how much money they’ve set aside this year. More than 2 in 5 Americans (41%) think they will reach their savings goal for 2019, compared with 28% who don’t think they’ll reach their goals (the remainder of Americans — 32% — didn’t set savings goals for the year). Americans are also optimistic about savings in 2020 — 42% plan to save more than they did in 2019, and just 9% plan to save less.

What you can do in 2020 and beyond: There are worse things than having too much cash saved, but make sure you’re investing enough for your future and not just hoarding funds. Having an emergency savings account that can cover three to six months of expenses, plus cash saved for short- and medium-term goals — like a vacation or a down payment on a home — are probably sufficient. As for the rest, investing it is the key to major growth.

“There’s a risk to holding cash that Americans often overlook, and that’s losing purchasing power to inflation,” O’Shea says. “Avoiding the stock market with money you’re saving for a faraway goal like retirement is actually significantly riskier than investing over the long term.”

If you’re concerned that you don’t have the resources to make a good decision about investments, start with NerdWallet’s guide on investing for beginners. A sound investment strategy doesn’t have to be complicated.

Recession fears abound

Many experts believe a recession is inevitable. The question may not be if it will happen, but when. About three-quarters of Americans (74%) think they would be personally affected by a recession if one occurred in 2020. The biggest concern is the cost of living — more than 3 in 5 (63%) of those Americans think their cost of living will increase in the event of a 2020 recession.

Even if the U.S. doesn’t experience a recession in 2020, there’s a lot happening in the new year — including a presidential election — that Americans feel could affect their finances, and in particular, their investments. Overall, more than one-third (37%) think the stock market will do better in 2020 than it did in 2019, while about a quarter (26%) do not and over a third (36%) are unsure.

Although Americans are pretty evenly split on whether they expect interest rates to drop in 2020 — 33% say yes, 32% say no and 35% are not at all sure — the majority of investors (78%) think the 2020 presidential election will have an effect on their investments. Close to half of investors (48%) think the presidential election will have a positive impact on their investments, while 3 in 10 (30%) think it will have a negative impact.

What you can do in 2020 and beyond: “If you’re investing for the long term, current events shouldn’t dictate your investments,” O’Shea says. “You can’t predict or prevent a recession or other economic turmoil, so it’s important to control the things you can control. For most people, that means having a decent emergency cushion, spending less than you make and continuing to save and invest as much as possible.”

New year, new investment strategies and savings goals

Nearly half of investors (49%) plan to change their investment strategy in the new year due to the current economic climate — 1 in 5 (20%) plan to invest more aggressively in 2020 than they did in 2019, while 29% plan to invest more conservatively. About a quarter of investors (23%) plan to invest more money in 2020 than they did in 2019 based on the current economic climate, and 15% plan to invest less.

Some Americans will also be saving more cash in 2020. Among the 42% of Americans who plan to save more in 2020 than they did in 2019, building up an emergency fund is the most popular reason to save more (59%), followed by saving for a vacation (31%).

About half of parents of children under the age of 18 who plan to save more in 2020 than they did in 2019 (45%) say that they’re saving more to cover expenses related to their children. Among those planning to save more in 2020 than they did in 2019, millennials are more likely than members of other generations to say they’re saving more for a down payment on a new home (36%, compared with 20% of Gen Xers and 5% of boomers).

What you can do in 2020 and beyond: Set savings goals for the new year and make a plan to reach them. About a third of Americans (32%) didn’t have a savings goal for 2019, but having one or two clear objectives can help motivate you to save for the things you care about, like your dream vacation or a new home. Here are five steps to help you attain your savings goals in 2020.

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