Financial technology company Sophie (SOFI 0.59%) recently conducted a survey of 1,000 investors (excluding SoFi members) to find out how they feel about the stock market now as it exits a depression between 2022 and 2023.
One of the most interesting findings is that 85% of investors say they plan to make at least one major change to their portfolio or investment style in 2023. This is not too surprising, considering that only one-quarter of investors have no regrets about their investment in 2022.
5 Big Changes American Investors Are Making in 2023
As noted, most investors plan to make at least one major shift in their strategies in 2023. Only 15% plan to continue investing exactly the same as in 2022. Here are five of the most popular responses.
1. Invest more in the market
The most common change that investors plan for 2023 is to invest more money in the market. Although the declines in 2022 have been scary at times, it looks like the market has (for now, at least) seen its low point, and many investors may be interested in adding to their portfolios when stocks take a beating. after all, S&P 500 It’s still about 18% below where it started in 2022, and many stocks are 30%, 50% or more below their peaks.
2. Do more of their own investment research
The second most common change is that investors want to take a more active role in researching the investments they buy. And this certainly makes sense. After all, many of the investors most hurt in the 2022 crash are those who followed the crowd into high-flying stocks and cryptocurrencies without knowing much about what they were buying.
If you’re in this group and want to learn how to do investment research the right way, here’s a great primer I wrote that can help you get started.
3. Work with a financial advisor
Not everyone should be a completely independent investor, especially if you don’t have the time and desire to learn about things like asset allocation, risk management, and the many investment choices available to you. A key tip is to make sure the financial advisor or financial planner you choose has a fiduciary duty — all Certified Financial Planners® do, but not all who use the designation of financial advisor or planner meet this standard. You need a fiduciary to put your best interests above their own, especially when it comes to things like investment fees.
4. Buy a new type of investment
Maybe that means buying stocks instead of cryptocurrencies or exchange-traded funds instead of individual stocks. Some stock market investors may want to own real estate or other forms of tangible assets. Diversification is definitely a great tool when used properly, and buying new types of investments can be a great way to achieve this.
5. Plan to change their asset allocation
This is somewhat related to the previous change, buying new types of investments. Asset allocation refers to how much of one’s investable assets are allocated to different investment classes (stocks, bonds, cash, real estate, etc.). Many investors who have started in the past few years are 100% in stocks or have over-weighted things like cryptocurrencies. Creating an age-appropriate, responsible asset allocation is certainly a worthy goal.
Change can be good
As a final thought, it is encouraging that most investors do not want to change after the disappointing performance of the stock market in 2022, but most of the top changes are more responsible, more aware or simply good In addition to investors, 93% of survey respondents said they continued to invest despite market conditions, indicating that a long-term mindset is common. All good investors should be able to adapt their investment strategies over time, and it seems that many investors are doing just that.