Investor confidence hits record high as more Americans embrace financial risk

Confidence among US investors has climbed to new highs, with more consumers feeling financially secure, experienced in investing, and open to taking on market risk.

That’s according to a new report from Hearts & Wallets which shows that, nationally, 51% of households now feel “secure” about their financial future, up four points from last year and 11 points higher than in 2010.

Those who view themselves as “experienced” investors are also at the highest level since tracking began. These investors are not only more likely to make their own investment choices but also more likely to seek out professional financial guidance.

Comfort with investment risk is also surging with 38% of households now saying they are “very” or “somewhat comfortable” with market volatility if it could lead to higher returns, a 20-point increase since 2012.

Firms with the most risk-tolerant clients include E*TRADE, Vanguard, and Robinhood, where nearly two-thirds of investors report being comfortable with volatility. Principal Financial shows the broadest mix of attitudes, with about one in four investors “very comfortable” and one in five “very uncomfortable.”

Among asset managers, Fidelity, Vanguard, and BlackRock/iShares lead in attracting risk-tolerant investors, while American Funds appeals to more cautious households.

“Increasing investor confidence influences buying patterns,” says Laura Varas, CEO and founder of Hearts & Wallets. “More confident consumers want to make investing decisions on their own and use financial advisors. Confidence and risk tolerance are important tools to engage today’s buyers.”

Multiple savings and investment goals are becoming the norm, with 65% of households now pursuing three or more goals. Building an emergency fund remains the top priority for 53% of respondents. The report notes that stronger goal setting appears to be driving action, with emergency reserves better funded than a decade ago.

Despite rising optimism, economic and political concerns persist and more than 40% of households express high concern about the US political environment, inflation, and the future of Social Security. On a personal level, data security remains the top issue, cited by 28% of respondents.

Thirty-two percent of households now agree they “see value in paying for professional financial advice, whether or not I use a financial advisor today,” a marked improvement from prior years. Additionally, more Americans report that they “enjoy thinking about money,” with 30% agreeing compared to just 18% in 2011.

Sustainability continues to influence investment choices, rising to 26% from 21% in 2022. Fewer households expect to spend all their wealth in their lifetime, and more are paying attention to insurance credit ratings with 33% saying those ratings matter today, up from 25% in 2010.

“As more consumers enjoy thinking about money, they are setting more goals for themselves and working toward achieving them,” says Beth Krettecos, Hearts & Wallets subject matter expert. “This trend is changing buying patterns in favor of firms that understand and build for consumer needs.”

The report draws on the firm’s expansive Investor Quantitative Database, including over 85,000 US households and 135 million data points covering 15 years of saving and investing behavior.