Three quarters of investors are holding on to their existing investments and 37 per cent believe now is the time to buy, according to a poll.
75 per cent of investors polled by Money Observer's sister website Interactive Investor are holding on to their existing investments, despite the FTSE 100's move into bear territory yesterday. Further, 37 per cent of investors polled believe that now is the time to buy.
In a poll of 9,099 investors, 40.1 per cent said that their current approach to investing is to hold on to their existing investments. Meanwhile, 20.3 per cent said they are actively buying and 16.7 per cent are starting to buy back in.
Overall investor sentiment has plummeted to a two-and-a-half-year low.
FURTHER TO FALL
However, only 16 per cent of investors polled by Interactive Investor say they are continuing to sell their higher-risk assets because they believe that the market still has further to fall.
About 6 per cent said that they are staying out of investing because they believe that this is just the start of a pronounced lower leg.
'Global equities remain under severe pressure, with many markets already in bear territory and others heading there fast,' says Rebecca O'Keeffe, head of investment at Interactive Investor, commenting on the results.
'With every upturn being followed by steeper falls, investors are understandably becoming increasingly wary of committing new cash to the market.'
Concerns over the Chinese economy, global growth, US interest rates and the oil price add to uncertainty. But O'Keeffe points out that the current sell-off has taken stocks to historically very attractive valuation levels. 'At some point the market is going to turn and history may well view this as a golden buying opportunity.'
In yesterday's global market rout, Interactive Investor saw heavy trading, with around 55 per cent of trades being buys and 45 per cent sells.
DON'T RUN FROM THE BEAR
Richard Stone, chief executive of The Share Centre, agrees that now is not the time to run. 'When encountering a bear the well-known advice is "do not run". Whilst concerns will persist for some time yet, I believe the same applies for investors when faced with a bear market.
'For personal investors, bear markets (just like bears) can be frightening. However, they are only an issue if you have to realise your investments at the bottom of that bear market - if you can take a longer-term view, bear markets can provide buying opportunities.
'History would suggest the recovery after the bear market will be substantially longer than the downturn and will deliver returns.'
O'Keeffe says: 'This is the time of the year when investors manage their finances and start to take advantage of tax-efficient products.
'Even if you are fearful of where the equity market might go from here, securing your Isa allowance or making a contribution to your pension is a sensible strategy and allows you to take advantage of any tax benefits without having to commit to taking any risk.'
Brave investors may actually benefit twice by looking to top up their pension now, adds O'Keeffe. They would secure a higher rate of tax relief on the one hand as well as potentially benefiting from future share price appreciation when the markets rebound.
'Pension investors in particular need to make sure that they are not putting off contributing to their pension by the current market turmoil, as higher-rate taxpayers should actively be looking to take advantage of the current rates of tax relief available now, before it potentially disappears in the forthcoming budget.'