Study: We blame ourselves when investments fail to deliver
/Schroder’s latest Global Investor Survey looks at personal behaviours and motivations behind our decisions.
The survey of over 25,000 people investing in 32 global locations offers a glimpse of how those attitudes and behaviours change over time with annual surveys. Investors are those who will be investing at least €10,000 (or the equivalent) in the coming year, and who made changes to their investments in the past decade.
Key findings:
People lack confidence in how much they’ve invested or saved, and where it is exactly
Forty-four per cent of respondents were very confident with how much money they had invested with various providers
Those respondents who weren’t confident in their investment knowledge reported less awareness of where their money was
Respondents weren’t satisfied with their investments’ performance, with 51 per cent saying they had not achieved their investment goals over the past five years
Most said this was because of their own action or inaction as the cause of the failure - that is:
- I should have remained invested for longer/taken my money out sooner
- I didn’t take enough risk/took too much risk
- I made the wrong assessment of what I needed/I acted on bad advice from someone else
- I acted on bad advice from my financial adviser/I ignored the advice I was given by my financial adviserThe average holding period before changing or cashing in an investment is 2.6 years, however, experts recommend five years
People have unrealistically high annual return expectations, expecting 10.7 per cent return per year over five years, while one in six people expect a 20 per cent return on their full investment portfolio
Market uncertainty results in immediate changes to risk portfolios - after the MSCI World index of global equities dropped sharply in 2018, only 18 per cent of investors kept their investments the same and nine per cent made changes but kept the same risk profile
People expect their investments to make the income they want, and investment income expectations are high at on average about 10.3 per cent
There is a home bias for investments with some fear in investing in emerging markets - 31 per cent prefer most of their portfolio to be in funds that invest at home; 34 per cent want to invest in countries familiar to them, and thirty-one per cent believe emerging markets could be good for their portfolio but 24 per cent believe it’s too risky to do so.
