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Drawdown investors ‘remarkably resilient’ in volatile markets, survey finds

29 January 2019

As many as a third of drawdown investors would not make changes to their investments following sharp falls in the stock market, a new study from Canada Life has shown.

Of those investors who said they would be concerned about stock market moves (67%), markets would need to fall by as much as 7.5% in a single day to prompt them to move their money.

In the event of a significant market fall, 59% said they would spread their money across a mix of asset classes, while just over one in five (21%) would transfer their entire savings into cash.

Cash ranked more popular among DIY investors (25%) compared to people with an adviser – of whom just 18% said they would move to cash with a further 66% switching asset classes.

Andrew Tully, Canada Life technical director, said that far from making knee-jerk reactions, the majority of drawdown investors will remain “remarkably resilient” in times of volatility.

He commented: “Dealing with the prevailing headwinds is all part of the game when you continue to invest into retirement. It is key though to have the right diversified investment strategy and ensure your essential expenditure is covered through a regular income.

“As people move into retirement, it can become increasingly tempting to adopt a risk-averse stance and reduce exposure to stock markets. With global markets fairly volatile and continuing Brexit uncertainty, consumers will likely see cash as the safe haven in an increasingly blustery storm. But cash also carries it own risks, that being inflation and historical low interest rates, so settling for such poor yields exposes a pension pot in real terms.”

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