The COVID-19 pandemic has certainly had a large impact on the financial decisions of many individuals across the globe. The uncertainty of the pandemic along with continued times of extreme market volatility caused many to pull out of the market temporarily, or at least until things “returned to normal”. At Sherman Wealth, we are firm believers in “time in the market” over “timing the market”. Despite great market volatility and being spooked by unprecedented times in the world, sticking to your long-term financial plan is proven to give you the best output at the end of the rainbow.
So let’s take a look at some of the financial regrets young Americans have about their investing decisions over the last year. According to Fidelity Investments’ 2022 State of Retirement Planning Study, more than half of young adult investors halted saving for their retirements during the pandemic and nearly half said there is no point in saving until things return to normal.” While many of these individuals believed in pulling out of the market at the time, they now are wishing that they instead invested more instead.
A recent study from MagnifyMoney found that “Some 57% of Gen Z investors and 50% of millennials regret how they invested in the last 12 months,” with many wishing they invested more money into the stock market, others wishing they didn’t sell assets when they did, and some wishing they had saved more as a whole. Those who didn’t save sufficiently during the pandemic or pulled assets out of the market during a crash are also now feeling unsure about whether they can handle another unexpected expense or event. As you can see from the data stated above, those who didn’t see the original March 2020 COVID-19 crash as an opportunity to stick to their long term plan or potentially even invest more, are now regretting those decisions.
We know it’s easy to get spooked by the market, especially given the unprecedented events of the last few years. Now that it is financial literacy month, we wanted to take this opportunity to make sure to educate yourself on the benefits of long-term investing and recognizing behavioral biases that may be getting in the way of your financial decisions. We recently wrote a blog discussing how to identify behavioral biases and the “do’s and don’ts” during a market correction, so check that out if you find yourself having trouble sleeping at night because you are worried about your investments. Life is complicated, but your finances don’t have to be. If you start with the right foundation, such as creating a customized financial plan and stick to it, you’ll find yourself in a much better financial position in the long term. If you have questions about building your financial foundation or financial roadmap, email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here.
