6 Ways the Financial Crisis Changed How We Invest

The steep and shocking stock market declines many people experienced in their 401(k)s and IRAs in 2008 continue to haunt the memories of many investors. After experiencing such sweeping losses in a matter of days, many people will never look at investing quite the same way again. Since then, numerous investors have altered their finances to make sure another stock market shock won't catch them off guard. Here are some of the ways individuals have changed their investment strategies since the financial crisis:

More pessimism. A recent Fidelity Investments and GfK online survey of 1,154 investors age 25 and older found that 47 percent experienced a significant investment decline during the financial crisis averaging 35 percent of assets. Many households also experienced job loss (17 percent) or a large drop in income (35 percent). Even though the stock market has since climbed to new highs, 68 percent of the investors surveyed believe the country remains in a recession. Only 19 percent of survey respondents say they believe the recession is over.

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More personal responsibility. Investors also learned that they will need to count only on themselves to prepare for retirement. The majority of survey respondents (56 percent) say they alone are accountable for preparing for their own retirement. In contrast, majorities of investors say the government, employers and financial services companies have only some responsibility, or even no accountability at all, in helping Americans to prepare for retirement. "The likelihood of someone having a defined-benefit plan or a pension plan is declining and individuals have recognized that building up a nest egg is really solely their responsibility," says Ken Hevert, vice president of retirement products at Fidelity Investments.

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Save more. Only 45 percent of investors say they felt prepared or confident during the financial crisis, but that number has since increased to 61 percent. Among the people whose investment confidence grew, 42 percent increased their contributions to a workplace savings plan, IRA or health savings account, and more than half (55 percent) say they feel better prepared for retirement as a result. The average contribution increase was 35 percent more to an IRA and 17 percent more to a 401(k).

Create an emergency fund. An emergency fund can protect you and your family if you lose your job, experience a sudden health problem or need a major home or car repair. Some liquid savings can also allow you to avoid the fees, taxes and penalties often associated with dipping into investment and retirement accounts ahead of schedule. The investors who now feel more confident than before the financial crisis also boosted their emergency fund (42 percent), Fidelity found.

Pay down debt. Debt severely limits your ability to cope with a crisis because if you miss or are late with even a single payment, it's very easy to rack up even higher balances. Nearly half (49 percent) of investors who feel more confident now than before the crisis decreased their personal debt, and a majority now have less debt than before the financial crisis.

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Making more thoughtful investment choices. Before the financial crisis, it was easy to avoid thinking about the down side of investing. "You've got individuals who completely bailed out of the market and stayed out, people who got out of the market and then got back into it, and you've got those who stayed the course," says Hevert. "Those who stayed in stocks were the clear winners in terms of their portfolios."

Investors are now searching for information about how to both grow and protect their retirement savings. Fidelity says attendance at its workplace retirement seminars has increased significantly since the financial crisis. "When the stock market took a hit, people stopped looking at their statements," says Hevert. "People aren't afraid to look anymore, and not only are they not afraid to look, but they're not afraid to talk about it."