Scars from Financial Crisis Still Raw

Although the economy is booming and the stock market has more than quadrupled in value since the financial crisis of 2008, 65% of Americans say they have not fully recovered financially, Betterment learned in a survey.

Seventy-nine percent say they don’t fully understand what happened during or what caused the financial crisis. Fifty percent do not think the S&P 500 has gone up in value in the past 10 years, and 18% think it has declined.

Eighty-three percent do not think Wall Street is any more ethical than it was in 2008. More than one in four people have stopped saving for retirement or contributing to their 401(k). Two out of every three people say they are saving less than they did in 2008. However, 29% say they are making  a concerted effort to save more today than they were in 2008.

The survey also found that those who invested in 2008 and lost money are more likely to feel recovered and optimistic. Eighty percent of people who invested money in 2008 lost money but have since felt that they have recovered. Forty-one percent feel fully recovered.

Half of Americans are investing as much or more than they did 10 years ago, and nearly a quarter consider themselves even more risk tolerant than they were in 2008.

“The data reinforced a lot of what we already feel and see on Wall Street,” says Dan Egan, vice president of behavioral finance and investments at Betterment. “People are slow to trust big banks again, and are understandably worried this will happen again. But what we find extremely hopeful is the staying power of those who rode the wave and came out on the other side. People who were investing in 2008 felt the losses, but also witnessed the recovery. They know another dip is inevitable, but know that as long as they don’t get greedy or fearful, the rewards outweigh the costs.”

Market Cube conducted the survey of 2,000 people for Betterment in July and August.