A new survey by personal finance site WealthRocket has found that many Canadians are investing less due to economic uncertainty caused by high inflation, rising interest rates, and increased cost of living. The study interviewed 1,200 adults and found that 30% of Canadians are investing less as a result of the economic uncertainty over the last two years. Additionally, 30% of Canadians are reporting a lower risk tolerance due to the COVID-19 pandemic. The survey also revealed that 10% of Canadians who were investing have stopped, while 10% have not started at all, both due to economic factors. Fear seems to be overriding rational thinking, with people stopping or selling their investments when they feel uncertain, according to David O’Leary, CFA charterholder and personal finance expert at WealthRocket. The age group that saw the highest drop in investing was 35-44, likely due to the financial pressures of young families. However, only 9% of Canadians are currently investing more than they were pre-pandemic. Despite this, saving for retirement remains the top investment goal for 55% of Canadians. The report also noted that the cost of buying a home has become unreasonable for many Canadians, with homeownership lower on the list of investment goals. The drop in investing is attributed more to economic uncertainty than financial constraints. O’Leary advises against foregoing investing due to fear or lower risk tolerance, as those who stay on the sidelines will likely miss out on returns over the long term.
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