Investing

Investor optimism highest since 2000: Wells Fargo/Gallup Investor and Retirement Index

Investors are more confident about retirement, but evenly split on impact of rising interest rates, according to the recent report.

Investor optimism is at a 16-year high, driven by positive feelings about economic growth, unemployment and inflation, according to the results of the latest Wells Fargo/Gallup Investor and Retirement study.

The study’s optimism index now stands at 126, close to the high of 130 during the dot-com boom in November 2000, according to a released statement about the study. The survey was conducted in mid-February, just days after the Dow Jones Industrial Average topped 20,000 for the first time.

Reflecting their optimism, 60% of investors said that now is a good time to invest in stocks, up from 52% in late 2016 and the highest level of such sentiment since early 2011.

Despite their enthusiasm, most investors are not expecting a tax cut, and many said they would move some money out of stocks if interest rates continue to rise.

The study found that 39% of investors expect the percentage of income they pay in taxes to go up in the next few years, while 29% expect it to go down. About a third, 31%, believe their tax rate will stay the same.

A similar split was seen regarding the economic effect of higher interest rates; 32% said higher rates would be good, 34% said that would be bad, and 32% said they would not make much difference. But if rates were to rise, 37% of investors said they would be very or somewhat likely to shift money from equities to more conservative investments, up from 23% two years ago.

Among retired investors, 37% said that higher rates would be good for the economy while 26% said they would be bad.

While 78% of investors said they felt confident about having enough money to maintain the lifestyle they want in retirement, up from 69% in 2014, just 37% of non-retired investors and 40% of retired investors report having a written financial plan. In addition, only 28% of non-retired investors say they have given a lot of thought to the best age to retire. A slight majority of non-retired investors (54%) believe that knowing the age at which they plan to retire would make a difference in their financial behaviors today; 45% say it would not.

When established in October 1996, the survey’s optimism index had a baseline score of 124, which peaked at 178 in January 2000, and touched a bottom of -64 in February 2009.