Inflation, Fed rate hikes among top investor concerns: Investopedia survey

Investopedia Editor-in-Chief Caleb Silver joins Yahoo Finance Live to discuss the top concerns among investors and how millennials view crypto.

Video Transcript

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RACHELLE AKUFFO: Welcome back to "Yahoo Finance Live" everyone. In the latest Investopedia survey, investors remain cautious but hope for brighter days. Well, let's find out how that translates into their investor behavior with Caleb Silver, Investopedia's editor-in-chief.

Thank you for joining me today. So Caleb, looking at your survey, I saw that investors' top concerns are inflation, geopolitical conflict, and rising interest rates. How are their concerns shaping how they're investing?

CALEB SILVER: Yeah. Well, I think everybody has those three main concerns. And any one of them would be a major concern. The fact that all three of them are happening at the same time, that's causing investors to be a little bit more reticent, playing it safer with some safer investments, not picking individual stocks, picking more index funds, picking more ETFs. And holding out for maybe a smoother ride here because the market has been so volatile lately. So it's definitely causing some anxiety.

RACHELLE AKUFFO: Now, we did see that obviously with different generations, they're having really different opinions on how much crypto to have in their portfolios, how to balance that. How did they differ by generation? And is one sort of layer getting better returns than another?

CALEB SILVER: Yeah. So we just surveyed 4,000 people across the country, different ages, different demographics, all over the nation, to find out what they're learning, how they're learning about financial and investing information, where they get their financial literacy from, and where they're invested. And it turns out, a lot of them are invested in crypto. Not only that, they're thinking that crypto may be able to deliver the types of returns they need to fund their retirement.

Just by the numbers, crypto ownership by age gen Z, about 23% owned cryptocurrencies. Millennials, about 38% of millennials own some form of cryptocurrency. Gen X, 28% that's my generation. And baby boomers, not so much, about 6% there. But 28% of millennials expect crypto to help fund their retirement. That shocked me a little bit just because the expectations are so big.

RACHELLE AKUFFO: And that stood out to me too because obviously, we know that the US government as they try and explore crypto, is making it clear they don't want to see it in 401(k)s when people plan for retirement. So obviously, people sort of taking their own route doing that. Do you think that people are still clear enough on the risks when they take on crypto? And is this a good way to beef up retirement?

CALEB SILVER: No and no, I don't think people are very clear at all. I think that's where the financial literacy gaps are. And that's one of the reasons why we ran the survey. What do people think is going to happen or how do they think they should invest, and how much do they actually know about it?

And most of the people we surveyed, and I don't care if it was gen Z, millennials, or boomers, don't know very much about cryptocurrency, how it works, how to trade in it, or what it's backed by, and it's not backed by much. So a lot of people have some high hopes for an asset that's not proven, that's not backed by gold, not backed by the dollar, and not correlated with other assets. So that's a very big issue.

And the fact that they're learning a lot of that information a lot of them are seeking it online, that's great, great for Yahoo Finance, great for Investopedia, but a lot of them are getting their information from TikTok and from YouTube. And there's plenty of good content out there. But there's plenty of not-so-good content out there either. So in terms of building wealth and building that balanced portfolio that will help you retire or build wealth towards a purchase, crypto is probably not the way to do it but you got to learn a lot more before you put all your chips in, in that basket.

RACHELLE AKUFFO: And you raise a good point because it seems like every few seconds when you're scrolling through social media you're getting an investment app saying try this or someone recommending some new platform for crypto. And as we look at some of the numbers, gen Z getting their investment advice, 39% go to YouTube. One in four likes TikTok for financial advice. Internet searches 31%. Friends and family at 30% also cited as important sources of information. Is there information overload with some of these options? Or is it a case of more is more when you have so many more things to pick from?

CALEB SILVER: Well, I know this from having invested for the past 25 years, it's what you read and what you pay attention to and who you're listening to that ends up mattering most. So yeah, there's more than enough information out there. Platforms like TikTok have huge investing channels, and so does Twitter, and so does Instagram for that matter, and we're on them and so are you.

And some of that information is very useful. But it's got to start with education, not trying to pick the hot next Dogecoin or the next stock that's going to go to the moon per se, but building that balanced portfolio, paying attention to fundamentals, being balanced across what you purchase and what you put into your portfolio. And then your plan by age. And that's where responsible financial planning comes in.

That's what financial literacy month April is all about. We think financial literacy month is every month here at Investopedia but that's what folks need to concentrate on. And I don't care if you're 21 or 61, you still need to know the fundamentals and the basics, so you don't knock yourself off the path.

RACHELLE AKUFFO: And do you think some of these perhaps, these social media platforms, should play a bigger role in sort of perhaps putting banners about some of the risks that come with some of these pop-ups that do come from advertisers trying to push some of their investment products?

CALEB SILVER: Yeah. I don't know if we want social media platforms to police what we can and can't see. There's a big debate about that. That's one of the reasons Elon Musk is buying a big stake in Twitter. But there should be some fair warning or at least some differentiation of content across these social media platforms, where investing education is in the educational grouping, investing recommendations, or trading recommendations, are clearly labeled as that. That might be helpful for a lot of people because we know folks follow the herd. When they hear about an asset class that's doing well or they hear about a crypto token that has gone up 1000%, 2000%, that's when the herd rushes in.

What we're trying to do is say stop, make sure you understand how these things work before you start putting a lot of money into them. Because it's an easy way to lose a lot of money. And then you lose that taste and the desire to want to learn how to invest properly and build wealth for the long term. That's what financial literacy is all about and that's what we're trying to learn through this survey.

RACHELLE AKUFFO: And another thing in that survey, I saw that over half of Investopedia's invested readers believe that there is a bubble, about 54%, but where they saw the bubbles, mostly in US real estate, followed by Bitcoin, NFTs, and of course, Dogecoin. So then how much does that align with what's happening? If they think there's a bubble here but they still want to add these things to their retirement packages, and beef up their investment, why do you think there's this sort of disconnect?

CALEB SILVER: Because we have animal spirits. And our animal spirits tell us that we want to be involved, and we want to keep buying no matter what's going on, and we want to make sure we don't miss out on the next big stock or the next big cryptocurrency that's going to take off. At the same time, we always feel like there's a bubble and things are overpriced.

And folks need to kind of forget about those types of fears, those are the animal spirits driving whether we're buying or selling, and think about dollar-cost averaging. I'm never going to be able to pick the top. I'm never going to be able to pick the bottom.

The fact that they think real estate is the biggest bubble is interesting, that's the first time they've selected that. We've been surveying them for two years. Well, US housing, the US real estate market is in kind of a bubble but stocks are way down on that list. And even Bitcoin is way down on that list compared to where it was before. It helps that those assets have come way down in price, but still investors, especially our readers, always feel like there's a bubble but are always looking for an opportunity to capitalize wherever they can.

RACHELLE AKUFFO: So there you go. Listen less to your animal spirits, and follow some dedicated advice before making decisions. Great talking to you today, Caleb Silver, Investopedia's editor-in-chief. Thank you so much.