Key Takeaways

  • Older, wealthier investors are more bearish, but more measured than they were in 2008
  • Those buying stocks are flocking to Amazon and blue chips
  • Money market funds and high-yield savings remain safety plays

Our recent survey of readers shows that more than half of older affluent investors are more worried now than they were in 2008, but have been making more measured portfolio moves to protect themselves. 

"I'm taking a a very long-term approach, and holding onto stocks and funds already in my portfolio, and investing free cash while prices are low," one reader told us. "I'm looking for stocks with solid balance sheets," wrote another. "In 2008, I rode it out, but this time, I am transitioning to 'safer' investments during rallies," said another reader in response to our survey questions.

"In 2008, I rode it out, but this time, I am transitioning to 'safer' investments during rallies." Investopedia Reader

Market Rebound Stirs Anxiety

Older, wealthier investors say they're leaning on the lessons they learned during the Great Financial Crisis of 2008-09, and not panicking during the recent market sell off and subsequent return. But the recent rebound for equities has them feeling a little more bearish as the U.S. economy comes to grips with a sudden recession punctuated with the highest unemployment in nearly a century. 

The recovery in the stock market may look similar to 2009, but the economy is in a much different and precarious state than it was then. Investor anxiety over personal finance issues is at a record high, casting more doubts about the sustainability of the stock market's recent streak.

Investor Anxiety Peaks on Personal Finance Concerns

Of the nearly 1,200 respondents, over half were invested during the 2008-09 recession, and 74% of those were baby boomers or older, while a quarter were Gen X or younger. Older investors tend to have more invested, with more than 60% of our respondents owning portfolios of $500,000 or more.

These investors have more to lose than younger generations, and less time to recover from losses. Indeed, they were more cautious than those who weren't invested in 2008-09, with more than 60% indicating they are bearish or neutral, and less than 40% claiming to be bullish.

How are They Responding to the Market?

More than half of respondents say recent events have them more worried than 2008-09, leading many to say they’re making fewer portfolio moves than their counterparts who were not invested during the financial crisis.

Many are favoring high yield savings accounts and money markets, following a herd of institutional investors who have stampeded that way. Mutual funds continue to see outflows, while this group has been favoring index funds and ETFs.

Older Investors Split on Stocks

Older investors who are making changes to their investment strategy are split when it comes to stocks, with 33% investing less, and 44% investing more.

When it comes to individual stocks, these investors have generally been playing it safe, with a few exceptions. Amazon (AMZN) has been the fan favorite for this group and just about every other investor of late. The stock hits all-time highs on a regular basis, and has been a clear beneficiary of the stay-at-home economy. Amazon is also among the most widely held stocks in index funds and technology ETFs, and its oversized market cap of nearly $1.2 trillion gives it a heavy influence in the cap-weighted S&P 500.

Outside of Amazon, these investors have favored blue chip stocks like Coca-Cola, McDonald’s, PepsiCo, Facebook and Intel. Some of the wildcards appearing in these affluent investors portfolios include Tesla, which has been an entertaining stock to hold, and a profitable one for long-term investors, and Gilead Sciences, which is likely a bet on a vaccine or treatment for COVID-19.

While opportunistic at times, our more experienced investors, especially not yet in retirement, are caught in a classic risk/reward dilemma. While they don't want to give up gains they amassed over the last 11 years, the momentum behind the recent surge in stocks is hard to ignore.

[Charts and research by Amanda Morelli]