Investors remain positive on stocks even while cutting spending, survey shows

They may see storm clouds now, but self-directed investors expect the sun will come out tomorrow — or more specifically in 2023 — with 60% believing the S&P 500 Index will be higher in a year's time.

According to the Janus Henderson Investors 2022 Retirement Confidence Report released Monday, 86% of survey respondents were concerned or very concerned about rising prices and 79% were concerned or very concerned about their stock holdings. The survey also showed 45% of investors are feeling less confident in their ability to live comfortably throughout retirement, and 9% have hired or planned to hire a financial adviser in 2022. 

Despite all these negative thoughts, a mere 13% of investors have moved money out of stocks or bonds and into cash. In fact, the majority of respondents (60%) think the S&P 500 will be higher one year from now, while 26% believe the Index will be lower and 14% expect it will be relatively unchanged.

“With both stocks and bonds posting three consecutive quarters of negative returns in 2022, investor confidence has suffered, but it hasn’t collapsed,” Matt Sommer, head of the defined contribution and wealth advisor services team at Janus Henderson Investors, said in a statement. 

Sommer added that the Covid-19 stock sell-off and subsequent recovery put a spotlight on “the challenges of timing the markets and remain a vivid example of the importance of creating and sticking to a plan in all types of markets.”

The survey also showed investors are tightening their budgets, with nearly half (49%) saying they have cut spending or plan to in response to turbulent financial markets and rising inflation. 

Investments offering guaranteed income streams also rose in popularity. According to the survey, the preferred investments for generating income in retirement in the current environment include dividend-paying stocks (65%), annuities (24%), taxable bonds (23%) and tax-free bonds (23%).

“The combination of volatile equity markets and higher interest rates are driving strong demand for fixed and fixed-indexed annuities," said David Perry, CEO of Concourse Financial Group. "As clients worry more about inflation and the losses in their retirement portfolios, they are more intentional about seeking retirement income solutions.”