According to the latest edition of the firm’s Global Survey of Individual Investors, which polled over 7,000 people from 17 countries, investors expect to need average returns of 9.7% above inflation in order to meet their investment objectives. And, worryingly, given historical rates of return, 72% of the investors polled believe those return expectations to be realistic.
Indeed, asked their expectations of returns for 2015, 80% said they expect their investments to perform just as well, if not better than 2014.
Within the UK, that number is 84%. But, Natixis asks, should this be viewed as optimism or overconfidence.
“Certainly, with improving market conditions around the globe, low interest rates, and low to no inflation, experts in behavioral finance might say investor sentiment in 2015 reflects a recency bias, and individuals who have experienced good results today may allow themselves to assume that results will be just as good, if not better, tomorrow.
Indeed, it added: “Given an annualized return of 6.59% for the MSCI World Index over the past 25 years, it would seem that investors could be setting themselves up for a major disappointment should they not be able to moderate expectations. Based on their projections, one might also question whether, after a prolonged period of low to negative levels of inflation throughout most of the developed world, inflation even factors into the long-range investment plans of individual investors at all,” it said.
However, while there was a lot of optimism about market returns, there was also a lot of concern about the amount of money being put away for retirement.
Of the 750 UK investors surveyed, 29% had little or no knowledge of the income needed to live comfortably in retirement. And, of those, “only 22% were confident that their current investment approach would meet their retirement savings goals,” Natixis said.
