Survey: More than half of investors bought, sold or withheld stock contributions this year due to inflation, safer bank returns

With elevated inflation and higher interest rates, more than half of Americans with retirement or investment accounts have taken action on their stock investments in 2023, according to a new Bankrate survey. Some 52 percent reported that they had bought, sold or withheld investment due to inflation or higher returns on safe investments (such as savings accounts), or both.

“Nearly half of investors, 49 percent, did nothing or invested more, including 54 percent of Gen X and 57 percent of baby boomer investors,” he says. “Gen Z and millennial investors were much more active in response to inflation and interest rates, buying, selling and withholding additional investment.”

More Americans plan to increase their investments this year than decrease them. Looking forward, 27 percent of stock investors expect to invest more money during 2023 than they did last year, while about 45 percent will invest the same amount.

Younger investors are more likely to add to their investments than older ones. About 53 percent of Generation Z investors (age 18-26) and 43 percent of millennials (age 27-42) say they’ll increase their stock investments, compared to just 19 percent of Generation X (age 43-58) and 9 percent of baby boomers (age 59-77), according to the survey.

Bankrate surveyed 3,676 U.S. adults about their investments, revealing these top findings.

Key takeaways

The majority of American investors took action in response to higher interest rates, inflation or both

Returns on safe investments such as savings accounts, money market funds and Treasury securities are at their highest levels in 15 years. Meanwhile, inflation has recently reached levels not seen in 40 years. How are higher interest rates and elevated inflation affecting the actions of American investors?

More than half of stock investors (52 percent) took action of some kind – buying, selling or withholding money from stocks – due to higher returns on cash investments, inflation or both. Other key results of the survey included:

• 25 percent of American investors said they sold or withheld investments in response to one or both factors.
• 27 percent of respondents said they contributed more due to one or both issues.
• 32 percent of investors said they intentionally took no action with their stock investments in response to both of those two factors.
• 7 percent of investors were not aware of either factor.

The numbers break down differently by each factor, however, whether inflation or interest rates.

As a response to higher inflation, here’s how American investors responded:

• 20 percent contributed more to stock-related investments in 2023 due to inflation.
• 26 percent sold stock investments or purposely withheld further contributions.
• 46 percent intentionally took no action in response to higher inflation.
• 9 percent said they were not aware of elevated inflation.

In response to higher interest rates on safe haven cash investments, here’s how American investors responded:

• 21 percent contributed more to stock-related investments in 2023 due to higher interest rates.
• 25 percent sold stock investments or purposely withheld further contributions in favor of savings accounts, CDs, money market accounts or Treasury bonds.
• 35 percent have intentionally not taken any action.
• 18 percent said they were unaware of higher rates on safe haven investments.

Younger investors have been more active in 2023

Younger investors – including Gen Z and millennials – were more likely than older investors to take action with their stock investments in response to higher rates and inflation. Paradoxically, however, they were both more likely to buy more stock and sell more stock than older investors.

Overall, here’s how American investors responded in response to either inflation or higher interest rates broken down by age group:

• 87 percent of Gen Z investors took action, either buying, selling or intentionally withholding stock investments.
• 68 percent of millennial investors took action.
• 38 percent of Gen X investors took action in response to inflation or higher rates.
• 35 percent of baby boomer investors bought, sold or withheld investment.

Breaking it down further, when it comes to higher rates on safe haven investments, 37 percent of Gen Z investors said they had made more stock investments in 2023. At the same time, 38 percent had sold stock or otherwise withheld stock investment in favor of safe cash investments.

Older investors tended to be less active. Just 11 percent of baby boomers made more stock investments in response to higher rates, while 20 percent sold them or withheld further money in favor of safe cash investments.

The tendency for younger investors to be more active was similar in response to inflation.

When it comes to higher inflation, 47 percent of Gen Z investors sold or withheld additional investment, while 33 percent bought more in response.

Again, older investors were less active in response to inflation. Just 11 percent of baby boomers bought more stock-related investments, while 18 percent sold them or withheld further money from them.

About 1 in 4 American investors expect to add more money this year than last, with younger investors leading the way

Overall, more Americans expect to increase their investments in the stock market this year than decrease them. And the effect is more pronounced among younger investors, who are much more likely to buy more stock investments than older investors.

Looking forward, 27 percent of American investors plan to invest more in the stock market this year compared to last year, including 9 percent who will contribute “much more” and 18 percent who will contribute “somewhat more.” In contrast, 19 percent will invest less in 2023.

Here’s how the numbers break down overall:

• 9 percent of American investors said they will contribute much more to the stock market this year than last year.
• 18 percent will contribute somewhat more.
• 45 percent will contribute about the same amount as last year.
• 10 percent will add somewhat less to their stock investments.
• 9 percent will contribute much less than last year.
• 10 percent said they don’t know what they’ll do.

Younger investors were much more likely than older investors to say that they would add more to their stock investments this year compared to last year.

“Despite a bias toward action rather than inaction on the stock investing front, both Gen Z and millennial investors indicate a much higher intent to increase their stock investments this year,” says McBride.

Here’s how the intent to invest breaks down by age group:

• 53 percent of Gen Z investors expect to invest more in stock-related investments this year than last year, compared to 14 percent who expect to invest less.
• 43 percent of millennial investors expect to buy more stock-related investments this year, compared to 15 percent who will invest less.
• Just 19 percent of Gen X investors expect to invest more in stock-related investments in 2023, compared to 21 percent who will invest less.
• Only 9 percent of baby boomer investors expect to put more in stock-related investments this year, compared to 23 percent who plan to invest less.

“While many Gen X and baby boomer investors are dialing back stock exposure approaching and into retirement, it is important for Gen Z and millennial investors to maintain the long-term focus, increasing contributions to stock-related investments, and harnessing the power of compounding higher rates of return,” says McBride.

The percentage of Americans with stock investments rose in 2023

The proportion of Americans with stock-related investments rose in 2023, compared with the year before. In total, 46 percent of Americans own a stock-related investment in a retirement account or other investment account such as a brokerage account, mutual fund account, 529 education savings plan or health savings account (HSA), compared to 43 percent last year.

The youngest investors were less likely than older Americans to have stock investments:

• Just 35 percent of Gen Z have stock-related investments.
• 49 percent of millennials have stock investments.
• 48 percent of Gen X have stock investments.
• 46 percent of baby boomers have stock-related investments.

Men (at 51 percent) were more likely to have stock-related investments than women (41 percent) were.

Household income seemed to affect how investors responded to inflation and interest rates

Income seemed to play a role in how Americans dealt with their investments in response to higher interest rates or inflation, with clear differences in their approach to each factor.

Here’s how households responded to inflation, relative to their income:

• Households earning less than $40,000 annually were more likely to have sold or withheld further stock investments (30 percent) than purchased more (19 percent).
• Households with $40,000-$79,999 per year were more likely to have sold or withheld further stock investments (25 percent) than purchased more (18 percent).
• Households earning $80,000 or more per year were about even in whether they sold or withheld further stock investments (25 percent) or purchased more (24 percent).

This response to higher interest rates differed from how households reacted to higher inflation. In response to higher inflation, high-earnings households were more likely to sell or withhold further investment in favor of safer cash investments:

• Households earning less than $40,000 annually were about even in whether they sold or withheld further stock investments (25 percent) in favor of cash investments than to have  purchased more stock investments (24 percent).
• Households making $40,000-$79,999 per year were more likely to have sold or withheld further stock investments (24 percent) in favor of safe haven investments than to have purchased more (20 percent).
• Households earning $80,000 or more per year were more likely to have sold or withheld further stock investments (27 percent) in favor of safe haven investments than to have purchased more (23 percent).

• Methodology

  This study was conducted for Bankrate via phone interview by YouGov. Interviews were conducted from April 17-20, 2023, among a sample of 3,676 U.S. adults, of whom 1,665 have investment or retirement accounts. Data are weighted and are intended to be representative of all U.S. adults, and therefore are subject to statistical errors typically associated with sample-based information.