Investor Sentiment Holds Steady in 2012's Final Quarter

-- Investors' chief concern is political gridlock in Washington; some worry that tax advantages of 401(k) plans may be in jeopardy

-- Top New Year's resolutions include trimming household budgets and traveling more

Jan 07, 2013, 08:00 ET from John Hancock Financial

BOSTON, Jan. 7, 2013 /PRNewswire/ -- Investors' confidence held steady in the fourth quarter of 2012, with the John Hancock Investor Sentiment Index® hovering at +18, compared to a score of +17 in the third quarter of last year.  Investor sentiment has remained at a relatively modest level over the last three quarters amidst widespread economic and political concerns, the Index showed.

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Investors continue to have positive views toward equities, with roughly half (48 percent) saying it is a good time to invest in stocks, while their outlook for fixed income remains mixed. Just over a quarter feel now is a good time to invest in bonds (27 percent), yet a similar share (30 percent) think it's a bad time.  Stock market growth is in the near future, according to more than half the investors polled. They think the Dow Jones Industrial Average will be at or above 13,500 by the end of the third quarter of this year. Overall, investors think blue chip stocks (20 percent) are the type of investment with the most potential, with healthcare and energy as the likely best-performing sectors.

Looking toward the New Year, investors revealed that three in ten (29 percent) plan to find ways to trim their household budget in 2013. One in five said their top financial New Year's resolution was to rebalance their investment portfolio, while 16 percent plan to create a will or estate plan. Learning more about investing and what they should be doing is the financial planning-related New Year's resolution for ten percent of investors.

From a fun and leisure standpoint, more than a third of investors (36 percent) plan to take a vacation in 2013. One in seven (15 percent) plan to exercise or live a healthier lifestyle. Close to one in ten (nine percent) plan to simply enjoy life and be happy, while eight percent claim they do not make resolutions. Only a few plan to save money, pay off debt, or try to reduce stress (each, three percent).  Even fewer plan to spend less money or spend more time with family and friends (two percent each).

When asked about their key concerns, nearly two out of three (63 percent) describe themselves as very concerned about political gridlock in Washington, DC. More than four in ten (45 percent) expressed concern leading up to the last minute fiscal cliff decisions. The national debt (57 percent) and the cost of healthcare (58 percent) also continue to worry investors.

Inflation is a major concern as well.  Twenty-six percent feel very concerned about inflation, with the share of investors who think that the rate of inflation will run at more than four percent two years from now increasing to 22 percent from 17 percent in Q3 of 2012. The plurality of investors (44 percent), however, predicts inflation will remain in the three to three and a half percent range.

"While investors certainly have a lot on their minds, our survey indicates that many investors are feeling good about their financial position," said Bill Cheney, John Hancock's Chief Economist.  "Four in ten feel they are better off financially now compared with two years ago (42 percent), and slightly more (47 percent) expect their situation will improve in the years ahead."

"Retirement saving and investing remains the top goal for 40 percent of workers in our survey. However, there are signs that enthusiasm for 401(k) investing has weakened somewhat compared with earlier in 2012.  About two-thirds (63 percent) say they are likely to invest in a 401(k) over the next 12 months, which is lower than at the same time last year when the figure was 70 percent. One factor may be the third of investors (34 percent) who say they are very concerned about potential changes to the tax advantages of employer-sponsored retirement savings plans, with another 34 percent somewhat concerned about this," Mr. Cheney added.

Concern over unemployment decreased significantly in the third quarter, with 37 percent of investors rating it as a chief concern, compared with 45 percent in Q3 of 2012.

About the John Hancock Investor Sentiment Survey
John Hancock's Investor Sentiment Survey is a quarterly poll of investors.  The survey measures investors' feelings about the current economic climate and their evaluations of what represents a good or bad investment given the current environment.  The poll also asks consumers about their confidence in reaching key financial goals and likelihood of purchasing financial products and services. This online survey was conducted by independent research firm Mathew Greenwald & Associates.  A total of 1,127 investors were surveyed November 26th to December 7th,  2012. Respondents were selected from among members of Research Now's online research panel.  To qualify, respondents were required to participate at least to some extent in their household's financial decision-making process, have a household income of at least $75,000, and assets of $100,000.

The data were weighted by age and education to reflect the population of Americans matching the survey's qualification requirements. In a similarly-sized random sample survey, the margin of error would be plus or minus 2.98 percentage points at the 95 percent confidence level. 

About John Hancock Financial and Manulife Financial
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