Some millennials, Gen Zers abandon investing accounts over inflation


It’s been a tough year for the stock market, with some consumers closing investment accounts on inflation and volatility concerns, according to a recent survey by Ally Financial.

As investors brace for another big rate hike by the Federal Reserve, inflation is still hovering near a 40-year high and the S&P 500 is down nearly 20% year-to-date.

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Meanwhile, nearly one in five consumers has closed an investment, trading, or brokerage account in the last 12 months, with most closures, 21%, coming from Gen Z respondents, according to an Ally survey of 900 investors.

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Nearly 40% of respondents sold some or all of their investments due to inflation, the report said, and 31% sold assets out of fear of losing money amid stock market volatility.

“Selling out” can lead to regret

Without an adequate emergency fund, some investors may sell assets to meet higher living expenses, said Kyle Newell, an Orlando, Fla.-based certified financial planner and owner of Newell Wealth Management.

Others may have reacted emotionally to stock market volatility, particularly younger, less experienced investors.

“The news can be scary at times, so it’s not uncommon for people to get nervous and sell out,” Newell said.

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The news can be scary at times, so it’s not uncommon for people to get nervous and sell out.

Kyle Newell

Owner of Newell Wealth Management

But paying off an investment account can lead to regret.

According to a recent study by MagnifyMoney, many Millennials and Gen Zers who invested in the past year have regrets. About 23% of Millennials and 15% of Gen Zers wish they had invested more, the survey found, and about 15% of each group regret selling an investment.

High inflation, stock market volatility and geopolitical conflict have all happened at some point, Newell said, and these factors shouldn’t put you off investing. And by selling when the stock market falls, you can “take losses,” regardless of your long-term financial goals, he said.

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“Investments are tools”

Of course, the decision to invest in a brokerage account can depend on an individual’s goals, explained Sean Michael Pearson, CFP and associate vice president at Ameriprise Financial in Conshohocken, Pennsylvania.

“Investments are tools,” he said. “They work best when you decide what you need to do and then go shopping for your tools.”

If you’ve been saving and investing to pursue a goal, selling assets in a brokerage account isn’t necessarily a bad thing, Pearson said. Once you’re ready to fund that goal, it makes sense to sell.

Alternatively, if you have decided that a particular investment is not in line with your goals, a targeted sale may also make sense. Then you can find other assets that better suit your needs.



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