More than half of retail investors are planning to buy more stocks before the end of 2022, according to a recent survey, with a leading advisor calling for caution and to avoid over-exposure.
“The poll’s findings show that retail investors are not behaving as you might expect,” said Nigel Green, CEO of the independent financial advisory and fintech deVere Group.
The survey, among 700 deVere clients around the world, found that 56% are seeking to add more equities to their investment portfolios this year.
“A jittery start to the year for stock markets got even worse last month, with most major indexes coping with major bouts of volatility,” said Green.
“The S&P 500, for example, ended the first half of the year down nearly 21%, the most dramatic first-half shedding in more than five decades. However, investors are shrugging off the bearish sentiment and are preparing to top-up their portfolios.”
The deVere boss said this was a good thing as it showed that people are thinking about the long-term.
They are preparing to use the downturn to their financial advantage by building their future wealth with quality stocks at lower prices, he explained.
Opportunities and potential
“The recent panic-selling has created some important long-term opportunities with high upside potential and low-risk possibilities. Sensibly, they are not only remaining fully invested but they are looking to build their investments.”
Despite the bullish sentiment, the deVere CEO warned against seeking radically more exposure to equities.
“You must buy wisely in this current volatile, high inflation environment. Bear in mind that long-term and short-duration assets respond differently to rising inflation and interest rates.”
Green suggested turning to less familiar, return-enhancing asset classes which could include venture capital, structured products, cryptocurrencies, high dividend stocks, hedge funds and managed futures, and real estate.
“Building your investments is, clearly, the best way to grow your long-term wealth. But don’t get carried away with one asset class,” he said.
“Diversification remains your best tool to reach your financial objectives.”