Four years after the 2008 global financial crisis, the onset of a severe economic recession, and ongoing market turbulence, a lack of faith in equity investing appears to be lingering, even for long-term investors who say that saving for retirement is their top financial priority. In an online survey of 850 adults in the United States aged 21-50 with at least one investment account, just over six in ten investors (61%) believe that investing in stocks is very important or important to helping them achieve their retirement savings goals. The survey was conducted in August 2012 by Harris Interactive for T. Rowe Price.

And while about half of investors (51%) surveyed say that they have roughly the same tolerance for risk they had before the financial crisis, 37% say they are now refraining from investing in stocks because of current economic or market conditions. Investors’ reluctance to invest in stocks is reflected in data from the Investment Company Institute, which shows that net new cash flow into stock mutual funds was negative in 30 of the last 48 months – including 15 of the last 16 – through September 2012.

Investors’ aversion for stocks stands despite historical evidence showing that stocks, as measured by the S&P 500 Index, have outperformed other asset classes with an annualized total return of approximately 9.8% between 1926 and 2011[1]. Over the course of a long-term retirement savings program, an under-allocation to stocks could lead to shortfalls in investors’ account balances, T. Rowe Price financial planners believe.

Selected survey findings

Just over six in ten investors aged 50 and under (61%) believe that investing in stocks is very important or important in helping them achieve their long-term retirement savings goals.

Accordingly, 37% of investors say that they are currently refraining from stock investing. Factors cited include the pace of the U.S. recovery, general market volatility, political uncertainty, rising health care costs, actual or potential unemployment, the pace of the global economic recovery, the pace of the U.S. housing market’s recovery, the Eurozone debt crisis, and potentially higher taxes on income, dividends, and capital gains.

Risk aversion is also prevalent in investors’ attitudes toward fixed income investing, with 76% of investors saying they are only somewhat or not at all willing to take on more risk to obtain a potentially higher yield.

The crisis appears to have ushered in a new era of financial prudence: with respect to their personal savings, 81% of investors say they are saving about the same or more than they were before 2008.


Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service

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