This article tells us how most individuals changed their investment strategy after the financial crisis. The main points are as follows:
1. People are now very pessimistic when looking towards the future.
2. Investors have learned that they will need to count only on themselves to prepare for retirement.
3. Since the financial crisis people are beginning to save more, putting more of their money into workplace savings plans and so on.
4. Creating emergency funds to protect them from job loss and so on.
5. People are now chipping away at their debt, realizing that if they miss or are late with a payment, even higher balances can occur.
6. Making more thoughtful investment choices. People are now searching for information about their investments.
"When the stock market took a hit, people stopped looking at their
statements," says Hevert. "People aren't afraid to look anymore, and
not only are they not afraid to look, but they're not afraid to talk
about it."
Do you think that investors that are doing all of these will be safe in the future if something were to happen again? What else could investors do to protect themselves? Do you think this change in how we invest will last?
These are changes people have made, because some of them seem like common sense to me. Why would you not find information on your investments/try to reduce debt? It's crazy that this was not the status quo. I think these practices are here to stay, at least for out generation.
ReplyDeleteI agree that it's crazy that all of these things weren't standard before the crisis, but like we talked about in class people were riding the wave and doing everything they could to make an extra buck. Also, no one expected to necessarily have to be this cautious. Investments will never be 100% safe in the market but I do believe that following these steps will make them a lot safer.
ReplyDeleteThis article is evidence that investors are learning and hopefully this will prevent another financial crisis as large as the "great recession". After reading Blinder's conclusion in "After the Music Stopped" I was worried about history repeating itself but the fact that investors have changed their methods and become more cautious about their investment practices gives me hope, now I'm just curious to see how long these common sense practices last.
ReplyDeleteLike everyone has said it is mind boggling to think that people weren't taking most of these 6 methods into consideration before the financial crisis. I guess people saw that they were making money and kept making risky investments but that is probably a huge factor of what led to the crisis. But are big firms and extremely wealthy people also taking these pre-cautious measures or no?
ReplyDeleteI agree with everyone else, in that it seems like these 6 methods would've been taken into account before the financial crisis. However, I think it may have been that everything was going so well that people just really weren't that worried about their investments going sour, or losing their job. It is also clear that people have realized that living under a large amount of debt is not such a good idea...possibly due to people realizing how much debt our country is currently in, and how worse our situation has become since the crisis.
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ReplyDeleteMy main concern with these 6 new viewpoints towards investing is that people will remove all faith in the the financial system all together. People should remain optimistic and believe that our financial situation will eventually subside and become manageable. However, I do find it beneficial for individuals to start taking matters into their own hands and becoming more independent. I believe that having investors setting their priorities and making smarter decisions will ultimately allow them to be in a safer position if a crisis occurred again, but I don't believe that they will be completely immune to all of its effects.
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