Morningstar recently completed a study of how investors reacted to the stressors of 2020, including the sharpest drop over a short period in history and significant volatility. Surveying over 520,000 participants, the results yielded some interesting conclusions.
- Younger participants were more likely to use professionally managed portfolios, while older participants were more likely to self-direct their accounts.
- Participants making allocation changes tended to be older, had higher incomes and balances, and had more conservative portfolios.
- The analysis shows that participants who ‘stayed the course’ likely had better performance than those who transacted, suggesting that age is an important driver of how investors respond to market turmoil.
- Older participants would benefit the most from being invested in a professionally managed solution (target-date funds or managed accounts).
Click here to open a PDF article by Larry Swedroe of our partner firm Buckingham Strategic Partners that nicely summarizes the findings of the Morningstar Report.