Colin Ely says he doesn’t keep much in savings. Instead, he’s “aggressively invested in index funds.” The recent selloff in stocks has made him more reluctant to pull his money out—and potentially take a loss on his investments. But, if he finds “the right real estate deal” in the greater Philadelphia area, he’s willing to hit the proverbial “sell” button to make his dream a reality.
For the 31-year-old, the answer to the timeless money question—whether to save or invest—is straightforward, but for many it’s not so clearcut.
Still, like Ely, a majority of Americans are now prioritizing long-term financial goals, according to a recent study by Fidelity Investments. Among actively investing U.S. adults surveyed, 63% have changed their investing habits in some way since the start of the COVID-19 pandemic.
And yet, this year hasn’t been so kind to investors, as the S&P 500 slumped about 19% at its worst, and is now down more than 13% for the year. Savers, meanwhile, are being rewarded by a slight uptick in interest rates—and rates are projected to reach pre-Great Recession levels by year-end as the Federal Reserve scrambles to quickly ratchet up a benchmark rate to quell inflation that hit a 40-year high earlier this year. These factors have made the save-versus-invest dilemma trickier this year.
“This is the first time that many people have experienced real inflation,” says Kathy Carey, director of research for Baird’s Private Wealth Management group. This dynamic has prompted more questions from clients who want to “make sure they’re in the right,” she says, though Baird advisers are largely doling out the same advice as always by first asking clients: “What do you need that cash for?”
Having a clear goal in mind—like…
Source : time
