Nearly four in 10 investors pulled their money from the stock market over the last year in response to current events, according to a new survey from MagnifyMoney, a subsidiary of LendingTree (NASDAQ:TREE).
What Happened: In a poll of 1,050 U.S. adults conducted from April 15-20, 38% of respondents said they withdrew from the stock market based on the news. Of that group, the most likely to exit the stock market were Gen Zers (67%), millennials (57%) and men (49%).
The survey found 70% of respondents acknowledging that world and national news factors into their financial decisions. This was most common among respondents with annual household income between $50,000 and $74,999 (80%), Democrats (77%), investors (77%) and millennials (76%).
The bad news that mostly influenced the decision to get out of the market involved inflation (63%), the coronavirus pandemic (51%), the Biden economic policy (25%) and the Russian war in Ukraine (19%).
Half of the respondents said they pay attention to Federal Reserve meetings, including 22% who said the Fed’s rate hikes have impacted their money management decision.
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What Else Happened: Still, not everyone was convinced their exit from the stock market was the right decision — among those who departed the market, 40% admitted regretting their decision. Among age demographics, 39% of Gen Zers expressed second thoughts, compared to 29% of Gen Xers and 22% of baby boomers.
As for the money that is no longer going into stocks, 46% of those who say current events had impacted a financial decision in the last year said they were more likely to focus on building an emergency fund.
“The last few years have been exhausting and challenging for most everyone,” said Matt Schulz, chief credit analyst at MagnifyMoney.
“Yet, we’ve all found ourselves watching too much cable news, doom-scrolling through social media and generally being swept up in the latest troubling news story. Given that, it’s no surprise that so many of us have let the day’s events impact our financial decisions.
“The problem is that money and emotion are a volatile mix,” Schulz added. “People tend to make bad financial decisions when emotions play too big a role, which is likely the case for many of the folks we surveyed. Instead of trying to protect themselves and limit their losses, they’re likely increasing them, as they’ll miss out on future growth that could be far greater than any losses they’ve suffered.”
