Financial technology company SoFi (SOFI 4.55%) recently conducted a survey of 1,000 investors (excluding SoFi members) to find out how they're feeling about the stock market now as we head out of a dismal 2022 and into 2023.
One of the most interesting findings is that 85% of investors say they plan to make at least one major change to their portfolio or investment style in 2023. This isn't too surprising, considering that just one-fourth of investors have no regrets about their investments in 2022.
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5 big changes American investors are making in 2023
As mentioned, the vast majority of investors are planning to make at least one major change to their strategies in 2023. Only 15% plan to keep investing in the exact same manner as they did in 2022. Here are the five most popular responses.
1. Invest more into the market
The most common change investors have planned for 2023 is to invest more money into the market. While the declines in 2022 were scary at times, it looks like the market (for now, at least) has seen its low point, and many investors may be eager to add to their portfolios while stocks remain beaten down. After all, the S&P 500 is still about 18% below where it started 2022, and many stocks are 30%, 50%, or even more below their peaks.
2. Do more of their own investment research
The second most common change is that investors want to take a more active role in researching the investments they buy. And this certainly makes sense. After all, many of the investors who got hit the hardest in the 2022 declines are those who simply followed the crowd into high-momentum stocks and cryptocurrencies without knowing too much about what they were buying.
If you're in this group and want to learn how to do investment research the right way, here's a great primer that I wrote that can help you get started.
3. Work with a financial advisor
Not everyone should be a completely independent investor, especially if you don't have the time and desire to learn about things like asset allocation, risk management, and the many investment choices available to you. One key suggestion is to make sure the financial advisor or financial planner you choose has a fiduciary duty -- all Certified Financial Planners® do, but not all who use the titles of financial advisor or planner are held to this standard. A fiduciary is required to put your best interests over their own, especially when it comes to things like investment fees.
4. Buy a new type of investment
Maybe this means buying stocks instead of cryptocurrencies, or exchange-traded funds instead of individual stocks. Maybe some stock market investors want to branch out to owning real estate or another form of tangible asset. Diversification is certainly a great tool when used properly, and buying new types of investments can be a great way to achieve it.
5. Plan to change their asset allocations
This ties somewhat into the previous change, buying new types of investments. Asset allocation refers to how much of one's investable assets are allocated to different investment classes (stocks, bonds, cash, real estate, etc.). Many investors who started within the past few years have been in 100% stocks or have overweight allocations to things like cryptocurrencies. Creating an age-appropriate, responsible asset allocation is certainly a worthy goal.
Change can be good
As a final thought, it's encouraging that not only do most investors want to make changes after the dismal stock market performance of 2022, but most of the top changes are in the direction of being more responsible, more informed, or just better investors. Plus, 93% of survey respondents said that they've continued to invest, despite the market conditions, which indicates a long-term mentality is very common. All good investors should be able to adapt their investment strategies over time, and it looks like many investors are doing just that.
