6 Signs Average Investors Are Finally Happy Again

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No question, 2008 is a year that few investors will soon forget; the stock market suffered its worst losses in a generation and left millions of Americans without any financial security. But now, with five years of strong stock market gains behind us since the nadir of the Great Recession, average investors are finally feeling more confident -- and getting back into investing for their financial futures.

The most recent Financial Review & Outlook Survey from TD Ameritrade (AMTD) showed several concrete signs that investor confidence has risen dramatically in the years since the crash. Let's take a look at some of the most important indications that ordinary Americans are moving in the right direction again.

1. More People Are Actually Benefiting From Strong Markets

In 2013, the Dow Jones Industrials (^DJI) rose 26.5 percent, the index's best year since the mid-1990s. Yet in past years, during the five-year-long bull market, ordinary investors have been less likely to reap the benefit of the gains, as many cashed out of stocks during the financial crisis and missed a fair chunk of the rebound.

The most recent survey results show that in 2013, though, that trend has definitely shifted. Fully two-thirds of those who responded said that 2013 was an excellent, very good, or good year, compared to just 11 percent saying that conditions were tough or very tough. Especially given that bond-market investments lost ground in 2013, the survey results suggest that investors were back in the stock market and enjoying its outsized gains last year.

2. More People Are Investing More Money in the Stock Market

Investors have recovered their optimism about the stock market.
The survey found that almost 80 percent of investors were putting the same amount of money or more as they did in 2012 into the stock market in 2013, up from 67 percent when TD Ameritrade did its similar survey in 2010. Correspondingly, the percentage of investors putting less money into the stock market has fallen by about a third, with only 21 percent now reporting that they're less inclined to invest in stocks.

3. More Retirement Investors Are Ahead of Their Target

One of the big concerns during the financial crisis was that retirees and near-retirees had suffered steep investment losses at the worst possible time. Now, after five years of gains, many of those who are saving for retirement are back on track to meet their goals, and a substantial percentage are actually ahead of where they expected to be. The 2013 survey showed 67 percent of investors ahead of their predicted pace on saving for retirement, compared to just over half in 2010. Again, that shows that most retirement investors stuck to their overall strategies and participated in the market's gains in recent years.

4. More Investors Are Moving Ahead with Major Financial and Life Moves

During periods of uncertainty, it's easy to put off big decisions like buying a new home or car, or going on costly trips. But in 2013, investors became more willing to spend, with fewer people procrastinating on big purchases.

In particular, the housing recovery and record low interest rates have almost eliminated procrastination in buying a home, with just 4 percent reporting that they'd delayed on a home purchase in 2013 compared to 13 percent in 2010. Just 26 percent put off travel expenses in 2013, and 18 percent deferred a vehicle purchase, down from 35 percent and 25 percent respectively in 2010.

5. Investors Are Smarter About Getting Rid of Debt

One of the major lessons from the financial crisis was how crippling debt can be when times get tough. The 2013 survey found that people have become a lot wiser about how to use unexpected income. Specifically, among those who said they would use a $1,000 windfall differently now than they would have before the recession, a quarter said they'd use it to reduce debt. That's more than triple the number who would've done that before the recession.

6. Investors See a Bright Future

As strong as 2013 was, investors think 2014 could be even better. More than twice as many respondents believe that 2014 will be better financially for them than 2013 was, with only 16 percent thinking that this year will be worse for them than last year. Overall, investors are optimistic about the economy as well, with optimistic views outnumbering pessimistic ones by nearly two-to-one.

Don't Get Wrapped Up in Day-to-Day Fears

Perhaps the most surprising thing about the TD Ameritrade survey findings is that when you look back at 2013, there were plenty of scary events that made many investors nervous day-to-day. Yet taking a step back and looking at the longer-term perspective, things worked out in the end , and those who stayed the course reaped big returns for their patience.

By having a long-term investing strategy and sticking with it, smart investors have proven that they can weather even the worst of market storms from the Great Recession.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google+. He doesn't own shares of the companies mentioned in this article. The Motley Fool recommends TD Ameritrade. The Motley Fool owns shares of TD Ameritrade.

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20 Comments

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weilunion

Thanks. So happy the investment class sees a bright future. But what accompanies the investment capitalists glee is homelessness, no jobs, no education, corporate run health care, tax subisidies for the rich, not having to pay their fair share of taxes. Basically, welfare for the rich.

So while the investment class is joyful, most Americans live in fear and one step from homelessness and poverty.

This is America. Trickle down misery subsidized by you, the taxpayer.

January 21 2014 at 9:33 PM Report abuse +2 rate up rate down Reply
1 reply to weilunion's comment
k4jlp

Wall Streeters, Congress and the elite have NO CLUE on how bad it really is out here. With increased cost of energy, food, healthcare, shelter, WE HAVE NO MORE MONEY AND BLOOD TO GIVE. However there is ONE bright light at the END, PAYBACK IS A B*I*T*C*H.

January 22 2014 at 6:48 AM Report abuse rate up rate down Reply
Valerie

There are two questions you should ask any financial advisor before you make a decision about whether or not to take his/her advice.

1. Ask to see the advisor's investment portfolio.

2. Ask what were the WORST investments he/she has personally made.

If the advisor won't disclose the contents of his personal portfolio --- or balks at telling you about his bad stock/fund picks --- he/she is not someone who is trustworthy.

January 21 2014 at 8:40 PM Report abuse +1 rate up rate down Reply
betty_brock

If they are happy, they are living in a fools paradise.

January 21 2014 at 8:22 PM Report abuse -3 rate up rate down Reply
1 reply to betty_brock's comment
weilunion

A fools paradise that we subsidize while they sit drinking single malt scotch on their Gulfstream jets. Time for revolution,

January 21 2014 at 9:38 PM Report abuse +1 rate up rate down Reply
k4jlp

My 401K did 35.5% in the last year with Fidelity, gained more than I lost in 2007-2008 and I have not changed a thing nor 'watched" the market, however it will fall again I suppose.

January 21 2014 at 7:50 PM Report abuse +1 rate up rate down Reply
1 reply to k4jlp's comment
weilunion

Sure, the entire stock market is a scam run by predators.

January 21 2014 at 9:34 PM Report abuse -2 rate up rate down Reply
Big John

"6 Signs Average Investors Are Finally Happy Again" and number 7. Those who put their money back into the market have not been swindled out of it, YET!!

January 21 2014 at 6:29 PM Report abuse rate up rate down Reply
muffychops

Sooner or later we have to stop printing money! Thenm what?

January 21 2014 at 5:59 PM Report abuse +1 rate up rate down Reply
1 reply to muffychops's comment
analyst0042

If this is your big worry..then when that happens you sell your stocks. There..I solved your problem.

January 21 2014 at 6:06 PM Report abuse -2 rate up rate down Reply
1 reply to analyst0042's comment
Big John

How long have you been working for the market? You should know the average joe cannot pull you money out for at least 24 hours and what if it goes to pot on Friday?? If you want to gamble with swindlers then have at it but don't make us who choose not to gamble sound ignorant.

January 21 2014 at 6:32 PM Report abuse +1 rate up rate down
hsenpfeffer

The market will not be useful again till thousands of hedge fund managers, financial advisers, portfolio specialists, commodities traders, mortgage brokers, stock analysts, finance firm CEOs and the assorted varieties of salestrash that make up the so called finance sector of the economy are in prison for long terms for the wrongdoing that lead up to the 2008 collapse.

January 21 2014 at 5:18 PM Report abuse +1 rate up rate down Reply
2 replies to hsenpfeffer's comment
analyst0042

Give up the ghost already...I made 6 figures in the market after the crash. Do not be afraid of the boogyman. Just learn from your mistakes and move forward.

January 21 2014 at 6:08 PM Report abuse rate up rate down Reply
1 reply to analyst0042's comment
weilunion

Buddy can you loan me a dime?

January 21 2014 at 9:39 PM Report abuse -1 rate up rate down
weilunion

For-profit prisons that they profit from. The investment class is little more than a corporate mafia and most people know this. And bys the way, who the hell has any money to play the Casino economy?

January 21 2014 at 9:35 PM Report abuse -2 rate up rate down Reply
Dennis

Investors are always happy during a sock market bubble.

January 21 2014 at 5:08 PM Report abuse +2 rate up rate down Reply
1 reply to Dennis's comment
analyst0042

And this is a reason for avoiding the market? Bet you make very little money in the market and lose a great deal.

January 21 2014 at 6:09 PM Report abuse rate up rate down Reply
SPQR

If you did not pull your money out of the market before it crashed and reinvest last year you are still where you were back in 2009 or 2008. In other words you have not not made 1 penny in 5 years. If you stayed with a broker like ML they raped you with charges and you actually have less than before the crash. Trillions were taken from us and the rich have it all, Get ready for them to do it again. We have no chance any more

January 21 2014 at 4:47 PM Report abuse +1 rate up rate down Reply
2 replies to SPQR's comment
analyst0042

Actually I was with a financial adviser who got his clients out before the crash. Did not lose a penny and made mucho since 2009. There are good and bad professionals in every endeavor. You have to give due diligence and investigate the history of the man you ask for help. You do not put your money in somebody's hands because he seems like a nice guy.

January 21 2014 at 6:12 PM Report abuse -1 rate up rate down Reply
1 reply to analyst0042's comment
Big John

Why should you have to watch it everyday to make sure you are not being swindled out of your money? You call that a good honest investment????

January 21 2014 at 6:34 PM Report abuse +2 rate up rate down
weilunion

Agreed. the United State of Corporations is here. Misery is all we have until we organize.

January 21 2014 at 9:36 PM Report abuse +1 rate up rate down Reply