More than half of retail investors are planning to buy more stocks before the end of 2022, reveals a new global survey, but they must do so carefully and avoid over-exposure, warns Nigel Green, CEO of the deVere Group of companies.
The warning from the game-changing chief executive of one of the world’s largest financial advisory, asset management and fintech organisations, comes after a poll of more than 700 clients found that 56% are seeking to add more equities to their investment portfolios this year.
The respondents are clients who currently reside in North America, the UK, Europe, Asia, Africa, the Middle East, and Latin America.
Of the findings, Nigel Green says: “The poll’s findings show that retail investors are not behaving as you might expect.
“A jittery start to the year for stock markets got even worse last month, with most major indexes coping with major bouts of volatility.
“The S&P 500, for example, ended the first half of the year down nearly 21%, the most dramatic first-half shedding in more than five decades.
“However, investors are shrugging off the bearish sentiment and are preparing to top-up their portfolios.”
He continues: “This is a good thing as it shows that people are thinking about the long-term. They are preparing to use the downturn to their financial advantage by building their future wealth with quality stocks at lower prices.
“They see that the recent panic-selling has created some important long-term opportunities with high upside potential and low-risk possibilities.
“Sensibly, they are not only remaining fully invested but they are looking to build their investments.”
Despite the bullish sentiment, the deVere CEO also issues a warning to those seeking radically more exposure to equities.
“Stepping off the sidelines to enhance your investment portfolios is to be championed, but you must also ensure that those bolsters help to create resilience and dynamism.
“You must buy wisely in this current volatile, high inflation environment.
“You should bear in mind that long-term and short-duration assets respond differently to rising inflation and interest rates.
“In addition, against the current backdrop, you should be considering less familiar, return-enhancing asset classes which could include venture capital, structured products, cryptocurrencies, high dividend stocks, hedge funds and managed futures, and real estate, amongst others.”
Nigel Green concludes: “Building your investments is, clearly, the best way to grow your long-term wealth. But don’t get carried away with one asset class.
“Diversification remains your best tool to reach your financial objectives.”