Investment Strategies of Main Street America: Risk is Off!

Main Street Americans favor “risk off” investment strategies in today’s volatile and uncertain markets, according to a survey of 1,325 investors conducted by Millionaire Corner in June.

While Millionaire investors say they are most likely to buy dividend stocks in times of market volatility, individuals from households with less than $100,000 to invest are more apt to lean toward traditional safe haven products.

These Main Street Americans say they are most likely to buy gold (30 percent) as a strategy to address market volatility and uncertainty, according to our research.  Another 20 percent say they would be most likely to put cash into a money market mutual fund, and just over 18 percent would invest in a certificate of deposit, savings account or other product at an FDIC-insured bank. Deposits at institutions participating in the Federal Deposit Insurance Corp. are guaranteed up to $250,000.

Main Street investors appear unlikely to adopt investment strategies that place a significant portion of their investments at risk. Only 13 percent – compared to 42 percent of Millionaire investors – would purchase dividend stocks as a response to market volatility.

Dividend stocks help to reduce market uncertainty by providing regular dividend pay outs. Though the companies that pay dividends tend to be among the larger and more stable U.S. companies, the investment risks posed by dividend stocks  appear unacceptable to Main Street investors in today’s market.

Why are Main Street investors so adverse to riskier investment strategies? Most are deeply worried about their retirement security, according to a survey of 1,400 investors conducted by Millionaire Corner in May. More than 40 percent cited “running out of money in retirement” as their biggest financial fear, and 20 percent said they worried most about “having to work longer than I planned to be able to retire comfortably.”

Job security ranks as the third biggest financial fear of Main Street investors, according to our May survey, and appears to be a big influencer in their risk off investment strategies.