Over 50% of global investors are dissatisfied with how their investments have performed over the last five years – but the majority of them blame their own inaction as the main cause for this failure.
People also lack confidence in how much money they have invested or saved – and which provider they hold it with. Just over 40% of investors say they are very confident with how much money they have with various financial providers.
This figure sharply declines amongst those with less investment knowledge, according to the latest Schroders global investor survey.
At a global level, people were found to have “unrealistically” high annual return expectations. Investors expect 10.7% of returns per year over the next five years, whilst one in six investors expect to make 20% in annual returns on their portfolios.
The survey also showed a clear lack of patience amongst investors. The average holding period before changing or cashing in on an investment is 2.6 years – just over half the five-year term experts generally recommend.
People are also quick to make immediate changes to their risk profile in times of market uncertainty. In the last quarter of 2018, when the MSCI World global equities index fell sharply, less than 20% of respondents remained with the same investments.
Over 50% of expert or advanced investors moved some of their portfolio into high risk investments when faced with market volatility.
Millennials (aged between 18 and 37) were found to be more likely to make knee-jerk decisions in times of volatility. They are also less patient than older generations, moving investments elsewhere or cashing in less than every two years.
Baby boomers tend to change investment or cash in every 3.7 years on average, whilst Generation Xers do so every 2.7 years.
People aged over 71 have more patience, waiting around four years to make any changes to their investments.
These figures vary from country to country. Overall, Japan is the most patient country. Once they’ve put cash in a project, Japanese investors tend to stay invested for nearly five years. Argentinians tend to remain invested for just over one year.
Over 25,000 people from 32 countries took part in the survey, commissioned by UK-based asset management firm Schroders in April this year. Respondents are those who will be investing at least €10,000 in the next 12 months, and who have made changes to their investments within the last ten years.
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