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How to Make Your Child’s Expensive Activity Fit Your Family Budget

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Every time the Olympics roll around, we hear stories about parents making significant financial sacrifices to raise elite athletes. But if you have kids, you don’t need to raise an Olympian to know that supporting a talented, passionate child can strain the family budget.

Roughly 40 percent of American families spend more than $1,000 a year on their children’s extracurricular activities, and 20 percent spend more than $2,500 annually, according to a January SunTrust survey of about 510 adults.

Some families spend a lot more.

MagnifyMoney spoke to three families with children who have exceptional interests or talents in sports, arts or cultural experiences to learn about the costs, decision-making processes and money-saving tips related to helping their children pursue their passions. While families have different priorities and values, they have one thing in common: They want the best for their children and have to make financial sacrifices to make it work.

Common obstacles

Deferring retirement savings

Peggy Chen and her daughter, Sophia, who is holding her trophies from piano competitions. (Courtesy of Peggy Chen)

Peggy Chen, 58, of East Brunswick, N.J., is a single mother who supported her daughter Sophia, now 32, and son Albert, 28, as they pursued their musical talents and passions growing up. The siblings eventually became professional musicians, one a pianist, and the other a violinist. But in order to focus on her children’s futures, Chen had to put hers on the back burner. She didn’t save for retirement while raising the kids.

The costs were high from the beginning. Growing up, Sophia played three pianos, including a Steinway grand piano the family bought for about $25,000 when Sophia was 9. She took an hourlong lesson with a top-notch piano instructor each week, who charged $70 an hour in the 1990s. If she was preparing for contests, the lesson would last 30 minutes longer. Chen herself accompanied Sophia to almost every single piano lesson and competition. The constant piano maintenance, tuning, travel and lodging for competitions also ate away a huge part of the family disposable income.

“There was no budget,” Chen said matter-of-factly. “We’d squeeze out however much money was needed to pay for her practices and performances.”

Chen’s then-husband took home about $25,000 a year as an accountant. Chen, a violin teacher, supplemented family income by giving lessons at home. Although barely scraping by, the couple wanted to give the best to their first child, developing her talent in any way they could.

When Sophia was in 8th grade, Chen and her husband divorced. Chen, a Taiwanese immigrant who had never worked in the U.S. and couldn’t even tell the difference between a checking and savings account at the time, had to work three jobs. Her top priority was making monthly mortgage payments to avoid being homeless.

Even at such a difficult time, Chen continued paying $70 for Sophia’s weekly piano lessons. Being extremely frugal allowed her to take care of the necessities and support her budding musicians.

“I’d be thrilled if I saw a penny on the ground, as if I won a lottery,” she said. “I didn’t dare to waste a nickel.”

Still, Chen said she had no financial planning. She only started saving for retirement a few years ago, when Sophia and Albert had both graduated from college.

Putting off paying down debt

The Rechkemmer family from Iowa has five children. It is not easy for the parents to financially support all the children’s extracurriculars. (Courtesy of Molly Rechkemmer)

Josh and Molly Rechkemmer live with their five children in a suburb outside of Iowa City, Iowa. He is an architect and she a part-time academic adviser and lecturer at the University of Iowa.

Their kids — Gracie,18; Sam, 16; Hannah, 13; Kate, 11; and Luke, 9 — are all involved in arts or athletic activities. Most days, each kid has two things going on after school.

The family is constantly in their minivan, traveling to different games, auditions, training sessions, competitions and rehearsals. The busy schedule has meant their finances are always tight.

Despite painstakingly budgeting and planning ahead for big payments, covering expenses for the kids’ extracurriculars have hampered the Rechkemmers’ ability to pay down debt quickly. The couple has credit card debt, a mortgage, car loans and student loan debt.

“Partly we try to do it wisely, and partly we just also know that we’re only going to have these kids in our house for what? Ten years,” Molly said. “And so we want to do things for them to help them develop.”

Prioritizing their children’s activities means spending thousands of dollars they could otherwise put toward their debt.

“I think almost a minimum per kid per year is easily $1,000 on the low end, and probably $3,000 to $4,000 on the high end,” Josh said.

Private sport teams with out-of-town competitions are particularly expensive. The parents have to pay for all of the uniforms, training and tournament fees and travel. Just for one season of one club sport, the cost for this big family easily adds up to at least $1,000.

Choosing what’s ‘fair’ when you have multiple kids

When there’s more than one child, it’s not always easy to decide who gets more resources from the family budget.

For the Rechkemmers, it could mean going with inexpensive recreational sports leagues instead of a club team, Molly said. But other times they would go for the more costly option, like the club teams, if they see a gift requiring a higher level of time and financial commitment.

“We’d love to say it’s always proactive, that we’ve intentionally made those decisions and thought it all through,” Molly said. “But a lot of the times it’s also reactive. An activity comes up and we have to make a decision whether or not they get to do it.”

Molly acknowledged that they haven’t always made the perfect decisions. There are things the family had heavily invested in, but the kids eventually lost interest. Retrospectively, they also realized that they might not have done enough for other kids.

Albert is playing the piano as his sister Sophia watches. (Courtesy of Peggy Chen)

Chen said she had never expected it would cost so much to develop Sophia’s piano talent. When it came to her second child, Albert, she downgraded the spending — she gave Albert violin lessons herself.

“I taught him myself, and he sat in the first chair,” Chen said. “I thought it was enough: no competitions, no anything else.”

Albert graduated from Northwestern University with a bachelor’s degree in political science and violin performance. He now studies at the San Francisco Conservatory of Music.

Making trade-offs

Emmeline dePillis and her family at the local Shichi Go San festival in 2008. Maria, then 7, is dressed in kimono on the right. (Courtesy of Emmeline dePillis)

Emmeline dePillis is a business professor at the University of Hawaii at Hilo, on the southernmost island of Hawaii where a large population of Japanese immigrants live.

Her older daughter, Maria, partly of Japanese descent, is passionate about Japanese language and culture. She is getting ready for her third extended trip to Japan.

For her last two trips, Maria went in a group where her school covered some expenses, but the family still had to pay more than $1,500 out of pocket each time. It cost less than if they had planned and paid for the trips themselves, dePillis said, but sending Maria on those trips meant putting off other purchases.

“Each time we were like, ‘Well, that’s a lot of money, but that’s a good deal,’” dePillis said. “And she loves it so much. It was like, ‘Well, maybe we can’t buy a new refrigerator this year, but it’s worth it because it’s such a good opportunity.’”

In the Rechkemmer family, a lot of other entertainment activities have to go: movies, concerts and short family vacations.

“Instead of planning a long weekend to take our family to Chicago and doing things like the planetarium, the aquarium and all those things, we might have a long weekend in Chicago where we spend most of the time at a baseball tournament,” Molly said.

How to make it work

Financial planners say plainly there are no perfect solutions to fund children’s expensive hobbies. But they stress that families need to take a holistic view of their finances, understand the level of risks and discuss with the entire family — yes, kids included — to make sure everyone understands the commitments and agrees on the sacrifices to be made.

To help families facing tough financial decisions around paying for kids’ activities, we gathered advice from parents and experts who have experienced these dilemmas firsthand:

1. Prioritize family values

dePillis said her family decided to fund their daughter’s Japan trips because her husband and her both value education highly.

“We see our daughter’s passion for Japanese culture as an educational thing,” dePillis said. “This is not just, ‘Oh, I’m going for fun.’ So if it’s ‘Let’s go to Disneyland’ versus ‘Let’s give Maria a chance to go to Japan for this educational experience,’ we would choose the educational experience for her.”

Prioritizing family values is the most important step to take in the decision-making process, experts say. There are no right or wrong decisions, but ultimately, the parents should thoroughly think why they are investing in the hobbies.

“The real way to be successful at this is to really identify what the family goals are, and then trying to balance out what their goals are for the future with what they think they can realistically provide for,” said John Rivers, a Clinton, N.J.-based financial planner at Newroads Financial Group.

2. Make a budget

In the Rechkemmer family, Josh, the father, tracks family spending almost religiously on spreadsheets, and he tries to budget for upcoming activities far ahead to make sure that they wouldn’t be hit by unexpected expenses.

The family budget for kids’ recreational and entertainment activities could go up to $10,000 a year. That translates to 10 percent of the family income.

Experts say there is no formula of how much should be spent on children’s hobbies that fits all families — again, it depends on family prioritization — but they do need to set a budget, look at the family finances holistically and trim expenses elsewhere.

3. Cut back on spending

When it comes to trimming expenses, pros say it’s more likely that the family’s lifestyle needs to change.

For example, when someone in the Rechkemmer family has a weekend sports tournament, they minimize the number of family members staying overnight in a hotel. For holidays and birthdays, Molly and Josh give practical presents for their kids, such as sports equipment, instead of the trendy electronic toys that their children long for.

Sam Rechkemmer plays baseball in May 2015. (Courtesy of Molly Rechkemmer)

For Chen, diligent saving on every single thing helped her get through the tough years. She barely had any expenses for herself.

“My life was pretty much bare-bones,” Chen recalled. “I’d always only buy food that passed expiration dates or was about to expire. You wouldn’t die eating it, anyway.”

Jude Boudreaux, founder of New Orleans-based Upperline Financial Planning, said the best strategy he’s seen is downsizing a family home. A client of his sold their big home and moved into a much smaller space — with no mortgage — to free up cash to pay for children’s activities.

Boudreaux said, typically, it’s easier to cut a family’s big-ticket expenses to make financial wiggle room. Parents need to make conscious decisions about whether or not to buy cars, or send their children to private schools if they also hope to develop their hobbies, he said.

But there is a bottom line: “Taxes must be paid. Utilities must be paid. Insurance must be paid,” said Lauren G. Lindsay, a financial adviser based in Covington, La.

After paying all the fixed bills and life necessities, families can look at the discretionary expenses and trim spending based on family priorities, Lindsay said.

4. Eliminate activities when needed

For the most part, the Rechkemmers try to stick to their budget, but there are moments when things get out of hand. The couple has periodically paused and reflected on the reasons they do all these activities.

“If it is to develop good friendships and stay active and be healthy and finding enjoyment in life, then that doesn’t need to come with the high burden of debt and so much stress,” Molly said. “If [the activities are] putting us into debt and causing so much stress, then it’s time to rethink if it’s all worth it and try to kind eliminate some things.”

5. Look for other resources or sources of income

Chen, the avid saver, said being thrifty wasn’t enough — she had to find other ways to earn more to support the family. Often she found herself participating in laboratory tests, earning $10 here and $20 there. Little things add up, she said.

At times, the mother and children all used their skills to support the family: Chen taught violin upstairs, Sophia taught piano downstairs and Albert went to students’ homes to tutor them in math.

You may be able to find outside help, too. For example, having Maria go on group educational trips allowed the dePillis family to save, as the school covered a large chunk of the expenses.

Lindsay encourages parents to explore financial aid opportunities before shelling out money for expensive extracurriculars, as some local camps and sports associations offer scholarships.

6. Talk to the children

Experts say the biggest “no no” when it comes to investing in children’s extracurricular activities is not consulting their opinions.

“Make sure it really is for them, not for us,” said Boudreaux, a parent himself. “Check our egos at the gate when we make the decisions.”

The kids need to be involved in the decision-making and understand the financial sacrifices the family is making, to make sure they will be as committed to the choice as parents are, Boudreaux said.

The dePillis family did that with Maria, and they worked out a plan together.

Maria is expected to enroll in the University of Hawaii at Hilo’s Japanese Studies program in the fall. She has made an agreement with her parents to stay in state for college. The in-state tuition is about $7,200 a year. Maria has also agreed to stay home during college so she could avoid taking out student loans.

“If she had gone to an out-of-state school, we would be paying $20,000 a year or more,” dePillis said. “I mean, imagine saving that kind of money. We feel like, ‘Oh, yeah, we will send you to Japan as much as you want.’”

7. Understand the consequences

The reason why these decisions are tough is that essentially, every spending choice is a trade-off, and it’s hard for parents to picture potential future risks, Boudreaux said.

Some trade-offs, such as deferring retirement or putting off paying debt can have severe consequences, experts say. In general, financial planners suggest parents put themselves and their futures first.

“Kids can get their own loans, and we can’t borrow for retirement down the road,” Rivers said.

However, in families where children are expected to support their parents in their old age, maybe it’s worth making those sacrifices now, experts say. In that case, parents should explicitly and appropriately communicate with their children about the expectations.

Chen said she has no regrets about putting off saving for her retirement.

“She was so good,” Chen said. “It would have been a pity if she had given up after a certain level.”

Sophia eventually studied piano performance and English at Oberlin College and Conservatory of Music. She became a journalist after graduation, but still keeps performing. “I am pleased that she has piano as a great lifelong companion,” Chen said.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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10 Great Free Checking Accounts

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.

The humble checking account may not offer rewards, cash back or many of the other perks offered by ritzy credit cards, but it remains the cornerstone of your financial life. Nobody likes paying monthly maintenance fees, so why not pick a free checking account that does away with them altogether?

Below, we’ve selected nine of the best free checking accounts by scouring our database for products meeting the following criteria:

  • No monthly maintenance fee
  • A low initial deposit amount (between $0-$50) needed to open the account
  • No minimum balance requirement
  • Minimal third-party ATM fees
  • Available nationwide

10 bests free checking accounts of March 2020

Account Name

Minimum needed to open

APY

Consumers Credit Union (IL) Free Rewards Checking$05.09% (applies to balances up to $10,000)
TAB Bank Free Kasasa Cash Checking$04.00% (applies to balances up to $50,000)
T-Mobile Money$04.00%(applies to balances up to $3,000)
One American Bank Kasasa Cash Account$503.50%(applies to balances up to $10,000)
Evansville Teachers FCU Vertical Checking$30 ($25 if you're already a member of this credit union)3.30% (applies to balances up to $20,000)
Lake Michigan Credit Union Max Checking$03.00%(applies to balances up to $15,000)
Andigo Credit Union High-Yield Checking$03.00% (applies to balances up to $10,000)
Simple Account$00% to 1.55% on balances in Protected Goals
Axos Bank$501.25% (applies to balances up to $150,000)
SoFi Money$01.10%

Consumers Credit Union (IL) Free Rewards Checking

The Consumers Credit Union provides an online-only Free Rewards Checking account to anyone in the nation who becomes a member. You can qualify for membership with a one-time $5 payment to Consumers Cooperative Association. Perks of the account, which charges no monthly maintenance fees and requires no minimum balance, include unlimited third-party ATM fee refunds.

However you do have to meet some requirements in order to get all of the benefits of the account (including the high APY). The APY for this account is divided into three tiers, with the lowest earning 3.09%, the middle 4.09% and the highest tier 5.09%. The requirements for each of these tiers are:

To earn 3.09%

  • Receive eStatements
  • Make at least 12 debit card purchases a month
  • Post direct deposits or ACH payments of at least $500 each month

To earn 4.09%

  • Meet all the requirements of the previous tier
  • Have a Consumers Credit Union Visa credit card and spend at least $500 a month on it

To earn 5.09%

  • Meet all the requirements of the previous tier
  • Spend at least $1,000 a month on your Consumers Credit Union Visa credit card

Keep in mind these high APYs only apply to balances up to $10,000. The portion of any balance between $10,000.01 and $25,000 earn 0.20% APY, and balances greater than $25,000 earn an APY of 0.10%.

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on Consumers Credit Union (IL)’s secure website

NCUA Insured

TAB Bank Free Kasasa Cash Checking

Headquartered in Ogden, Utah, TAB Bank offers a great rate on its Free Kasasa Cash Checking account. Developed by the Kasasa Corporation, a Texas-based financial services and marketing organization, Kasasa accounts help smaller banks compete against larger rivals by providing higher rates.

TAB’s account charges no fees for using third-party ATMs, and reimburses up to $15 in third-party ATM fees per month. There are no fees and no minimum balance requirement for this account, but to earn 4.00% APY reward rate, every month you must:

  • Deposit at least one ACH payment or direct deposit, or make one bill pay transaction
  • Make at least 15 signature-based debit card purchases of at least $5 each

If you don’t qualify in any given month, your balance earns 0.05% APY, and third-party ATM fees are not refunded. You can earn the reward rate APY on balances up to $50,000, which is well above the other maximum balances on this roundup. Balances greater than $50,000 earn an APY of 0.25%.

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on TAB Bank’s secure website

Member FDIC

T-Mobile Money

Wireless carrier T-Mobile is venturing out into new territory with a financial product – a competitive one, too. T-Mobile Money is a new checking account that pays a 4.00% APY on balances up to $3,000. Balances over $3,000 earn an APY of 1.00%. There are no monthly fees, overdraft fees, transfer fees, ATM fees or minimum balance requirements.

In order to receive the 4.00% APY, though, T-Mobile Money does require the following:

  • Enroll in a qualifying T-Mobile wireless plan
  • Register for Perks with your T-Mobile ID
  • Make at least $200 in qualifying deposits to your checking account in the calendar month

Balances that do not meet these requirements, or balances over $3,000, will earn 1.00% APY.

SEE DETAILS Secured

on T-Mobile Money’s secure website

Member FDIC

One American Bank Kasasa Cash Account

This small community bank, based in Sioux Falls, SD, offers a nationally available Kasasa Cash checking account that earns a decent 3.50% APY on balances up to $10,000. You need a minimum of $50 to open the account, but after that all you need to do to earn the very competitive APY of 3.50% is:

  • Make at least 12 debit card purchase transactions a month of at least $5.00 each
  • Receive electronic bank statements, account notices and disclosures
  • Log in to online banking at least one time a month

If you meet these qualifications, One American Bank also refunds up $25 in third-party ATM funds per month.

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on One American Bank’s secure website

Member FDIC

Evansville Teachers Federal Credit Union Vertical Checking

Don’t let the name of this credit union fool you—anyone can become a member if they open a $5 savings account, which then allows you to open a Vertical Checking account.

This free checking account doesn’t charge a monthly service fee or require you to maintain a minimum balance, and in return gives you an APY of as high as 3.30% on balances up to $20,000, provided you fulfill the below requirements:

  • Make at least 15 debit purchases each month
  • Make at least one direct deposit into the account each month
  • Login to your mobile or online banking at least once each month
  • Opt in to receive eStatements
  • In addition to the high APY, meeting these requirements entitles you to $15 a month for reimbursing third-party ATM fees.

In addition to the high APY, meeting these requirements entitles you to $15 a month for reimbursing third-party ATM fees.

SEE DETAILS Secured

on Evansville Teachers Federal Credit Union’s secure website

NCUA Insured

Lake Michigan Credit Union Max Checking

Despite its name, the Lake Michigan Credit Union is open to anyone who makes a $5 donation to the ALS Foundation. That small donation can pay off tenfold with the credit union’s Max Checking account, which features a 3.00% APY on balances up to $15,000. The account also has no minimum balance requirements and no monthly fees.

In order to receive the 3.00% APY, you must:

  • Direct deposit into any LMCU account
  • Make a minimum of 10 debit or credit card transactions per month
  • Make 4 logins to home banking per month
  • Sign up for e-statements

The Lake Michigan Credit Union’s Max Checking account also offers up to $10 in monthly reimbursements for non-LMCU ATM fees.

SEE DETAILS Secured

on Lake Michigan Credit Union’s secure website

NCUA Insured

Andigo Credit Union High Yield Checking

Another credit union with a competitive checking account is the Andigo Credit Union High Yield Checking account. With a handful of physical branches in Illinois and mobile banking services, Andigo Credit Union is open to anyone who makes a $15 donation to ConnectVETS.

Andigo’s High Yield Checking account features a 3.00% APY on balances up to $10,000, has no monthly fees, no minimum balance requirements and $12 a month in ATM surcharge rebates. However, to take advantage of the 3.00% APY, you must:

  • Have $500 or more in total direct deposit
  • Make 15 or more debit card purchases per month

Accounts that do not meet those qualifications earn a 0.06% APY. Balances above $10,000 earn 0.10% APY.

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on Andigo’s secure website

NCUA Insured

Simple Account

Another online-only account, Simple is owned and backed by regional bank BBVA Compass and offers customers a checking account that’s intertwined with the app’s Protected Goals savings account, and additional budgeting tools. Simple doesn’t charge any fees, meaning users enjoy:

  • No monthly maintenance fee
  • No minimum balance needed
  • No account closing fee
  • No stop payment fees
  • No debit card replacement fee
  • No ATM fee if using Simple’s network, but users can be charged a fee by other banks if using a non-network ATM

One fee you do have to pay is a foreign transaction fee when using your Simple card internationally, which can be up to 1% of the transaction.

As a cash management product, the Simple Account automatically comes with a savings account feature. While the checking balance in a Simple Account earns a token 0.01% APY, Simple’s Protected Goals savings balances earn an APY of 1.55%.

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on Simple’s secure website

Axos Rewards Checking

With a generous APY and no fees, online bank Axos offers a checking account that stands apart from the pack. Axos’ Rewards Checking account boasts an APY ranging from 0.4166% to 1.25%, depending on your balance and how many monthly transactions you make with your debit card. The account has no maintenance fees and no monthly minimum balance requirements, however there is a required $50 to open an account.

Axos says it does not charge overdraft or NSF fees for customers of its Rewards Checking account. The bank also offers overdraft protection, and will transfer available funds from a linked account, up to a maximum of six times per month.

The Axos Rewards Checking account’s other standout features include:

  • Unlimited domestic ATM fee reimbursement
  • No overdraft or NSF fees plus overdraft protection

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on Axos Bank’s secure website

Member FDIC

SoFi Money

SoFi may be better known for its personal loan products, but its SoFi Money cash management account offers a great free checking experience. This account earns a decent 1.10% APY with fees and no minimum balance requirements. SoFi charges no ATM fees of its own, and it will reimburse you for any third-party ATM fees you are charged anywhere in the world. If you need physical checks, you can request them from SoFI.

SoFi partners with multiple banks to hold your money in FDIC-insured accounts. This means that SoFi Money accounts are FDIC insured on balances up to $1.5 million in total, well above the standard $250,000 FDIC insurance level available with conventional accounts.

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on SoFi’s secure website

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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38% of Investors Are Worried They’ll Lose Retirement Savings Amid the Coronavirus Pandemic

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

As the coronavirus (COVID-19) pandemic brings the world to a screeching halt, one of its many detrimental effects is its impact on the stock market. With businesses shuttering, unemployment spiking and economic fears rising, the stock market has been hit hard, with multiple indexes plunging to new, multi-year lows in March.

Such a significant decline has taken a toll on individual investors, too. According to a new survey of over 1,000 respondents by MagnifyMoney, 38% of investors fear they’ll lose all of their retirement savings due to the economic turmoil caused by the pandemic. Already, the coronavirus outbreak has caused investors to lose money and alter their investing behavior, our survey found.

Key findings

  • Our survey found that 38% of investors are worried they’ll lose all of their retirement savings because of the coronavirus outbreak.
  • About 59% of investors said they’ve already lost money from investments during the pandemic (this does not include the 26% of respondents who weren’t sure if they had lost money).
  • The majority of the investors surveyed (39%) said they’re avoiding looking at their investment portfolio amid the coronavirus pandemic. On the other hand, 26% said they are “constantly” checking their investments.
  • Roughly 45% of surveyed investors said they had made changes to their portfolio in the last two weeks, as the coronavirus spread throughout the U.S. and across the world.
  • More than 1 in 10 investors said they’ll never feel comfortable with the stock market again, though 29% said they still feel comfortable. Other investors said they’d need to see some positive signs before they felt comfortable again.
  • When asked how the coronavirus will affect their future investing decisions, 55% of investors said it would impact them in some way (this percentage does not include the 13% who weren’t sure). Most notably, 29% will decrease their level of risk, 23% will make sure they have plenty of money outside the market and 21% will further diversify their portfolio.
  • Still, the vast majority of investors (78%) are confident the stock market will recover from the decline associated with the coronavirus. Only 8% don’t think the stock market will recover in their lifetime.

How much investors have lost amid the coronavirus pandemic

With markets swinging wildly and diving to new lows, investors have understandably lost money in the wake of the coronavirus pandemic. In fact, our survey reveals that the majority of investors (59%) have lost money — a figure that did not include the 26% of investors who were not sure if they had.

The bulk of investors who have lost money during the coronavirus outbreak, though, have lost less than $50,000, with 26% saying they lost less than $10,000, 12% saying they lost between $10,000 and $24,999 and 8% saying they lost between $25,000 and $49,999. However, some investors are reporting hefty losses, with 4% losing between $50,000 and $74,999 and 10% losing a staggering $75,000 or more. Meanwhile, our survey found that 15% of investors haven’t lost any money and 26% don’t know how much they have lost.

What’s arguably more alarming, though, is the sheer amount of investors (38%) who said they fear they have lost all of their retirement savings as fallout from the coronavirus pandemic continues to ravage the markets. While that percentage was fairly consistent across generations, it was highest among those in Generation Z. Nearly half (47%) of Gen Z worried their retirement savings would be completely wiped out, compared to 40% of millennials, 45% of Gen Xers and 30% of baby boomers.

One potential reason for the gap in concern between Gen Zers and baby boomers is that younger generations likely have far smaller nest eggs than their boomer counterparts, meaning it wouldn’t take as much market volatility to wipe out their retirement savings.

How the coronavirus pandemic is impacting investor behavior

As the coronavirus pandemic continues to batter the economy, our survey found that many investors (39%) are choosing to avoid checking their portfolios altogether. Meanwhile, 35% of respondents said they are looking at their portfolios occasionally, while 26% said they are checking in constantly.

Of those who are shielding themselves from watching their portfolios plummet, many are baby boomers. Our survey revealed that almost half of baby boomers (48%) are steering clear of checking their portfolio right now, compared to 37% of Gen Xers, 35% of millennials and 27% of Gen Z.

Despite the fact that many investors are opting against looking at their portfolios during this turbulent time, some are still making changes to their investing behavior in response to the coronavirus outbreak. Our survey found that while the majority of investors (55%) have not made any changes in the last two weeks, 19% have taken some money out of the stock market, 18% have reduced their level of risk, 9% have changed the type of stocks they’re investing in and a surprising 8% have taken all of their money out of the stock market.

How the coronavirus pandemic will influence future investing decisions

Stock market ups and downs are par for the course when it comes to investing, and our survey suggests that even the coronavirus pandemic’s impact on the stock market isn’t enough to have a lasting effect on the confidence of many investors. In fact, we found that the majority of investors (78%) think that the stock market will recover from the drop associated with the coronavirus pandemic.

Still, 8% of investors said they don’t think the stock market will ever recover in their lifetime, while 15% investors said they didn’t know if it would. It’s worth highlighting, too, that Gen Zers were far more likely (18%) than any other generation to not have faith that the stock market will make a recovery in their lifetime.

While we did find that most investors are confident that the market will recover from the drop associated with the pandemic, that confidence doesn’t necessarily translate to comfort. In fact, our survey found that 11% of respondents said they will never again feel comfortable with the stock market, which could impact how — and whether — they invest again in the future.

Meanwhile, 29% of investors said they still feel comfortable with the stock market during these turbulent times, though most investors said they’d need to see the following major changes to feel comfortable again:

  • 32% said that the Dow Jones would need to show positive growth
  • 29% said that the number of COVID-19 cases would need to significantly decrease
  • 20% said that news coverage of the stock market would need to turn more positive
  • 19% said the government would need to inject a stimulus into the stock market
  • 10% said they would need their financial advisor to tell them it’s okay

Aside from rattling investor confidence, our survey reveals the coronavirus outbreak could have lingering effects on investor behavior in the future. Only 32% of investors said their future investing decisions won’t be impacted by the coronavirus pandemic. Meanwhile, 29% said it will cause them to decrease their level of risk, 23% said that it would cause them to make sure they have enough money outside of the stock market and 21% said it will cause them to diversify their portfolio more. A striking 4% said they may not invest anymore.

What you should do when the stock market is dropping

When the stock market is taking multiple nose-dives as it has been recently, it’s understandable to feel uneasy. It’s important to remember, though, that investing is a critical component of building a healthy financial life, and stock market declines are par for the course.

In fact, market corrections — which is when the stock market drops 10% or more from its most recent high — happen every few years. Factoring in all corrections, the S&P 500 still has an average annual rate of return of around 10% over the longer term.

During times of turbulence, money moves you can make include:

  • Keeping your emotions in check when looking at your investment portfolio
  • Avoid pulling your money out of a declining market on impulse
  • Making sure you have a solid emergency fund in a liquid savings account
  • Considering a more conservative portfolio allocation if you’re closer to retirement and therefore have a shorter timeline

Methodology

MagnifyMoney conducted an online survey of 1,010 investors, with the sample base proportioned to represent the overall population. We defined generations as the following ages in 2020:

  • Gen Z are ages 18 to 23
  • Millennials are ages 24 to 39
  • Gen X are ages 40 to 54
  • Baby boomers are ages 55 to 74
  • Silent generation are age 75 and older

The survey was fielded through Qualtrics from March 18-19, 2020.

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