The Ontario Securities Commission (OSC) released a new study April 12, which explores the impact the pandemic is having on the behaviours and attitudes of retail investors. It reviews Canadian’s financial knowledge, preparedness, goals, commitments, attitudes and beliefs, examines the effects of market volatility and also discusses the prevalence of investment scams.
The research, conducted in September and October 2020, found that 36 per cent of investors think the pandemic will affect their financial situation until the fall of 2021; 35 per cent said it would affect them for even longer. In looking at Canadians’ preparedness for emergencies, it found that 31 per cent said they would be unable to afford an unexpected $5,000 expense. One in ten survey respondents said they had already sold some investments to cover their monthly expenses or were considering doing so.
Nearly half, 45 per cent said they stopped putting money towards financial or personal goals. “This represents about 35 per cent of all Canadians,” the OSC writes in the report, entitled Investing and the COVID-19 Pandemic.
In examining investor activity, the OSC’s researchers found that 48 per cent of survey respondents were active investors since the start of the pandemic with 22 per cent saying they sold at least some of their investments, and 40 per cent saying they bought investments during the year. Of those who sold, 29 per cent said they sold to pay for expenses, 21 per cent sold to minimize losses and 17 per cent sold to realize profits. Among those who purchased investments, 70 per cent said they were reacting to the market while 30 per cent were sticking to their regular contribution patterns; 28 per cent said they were motivated by the belief that assets were undervalued.
“Most investors are simply trying to endure the hardship and uncertainty of the pandemic, but some see it as an opportunity to increase their participation in capital markets,” the OSC said in a statement announcing the publication’s release. “We continue to see the uneven impact that this crisis is having on retail investors,” adds Tyler Fleming, director of the investor office at the OSC. “Understanding how the pandemic is affecting different segments of the population is essential for supporting retail investors.”