Caution Lingering Among Long-Term Investors Four Years After 2008 Financial Crisis, T. Rowe Price Survey Finds

 Caution Lingering Among Long-Term Investors Four Years After 2008 Financial
                      Crisis, T. Rowe Price Survey Finds

Aversion for equity investing among those aged 50 and under could lead to
shortfalls in retirement savings

PR Newswire

BALTIMORE, Nov. 13, 2012

BALTIMORE, Nov. 13, 2012 /PRNewswire/ --

News

Four years after the 2008 global financial crisis, the onset of a severe
economic recession, and ongoing market turbulence, a lack of faith in equity
investing appears to be lingering, even for long-term investors who say that
saving for retirement is their top financial priority. In an online survey of
850 adults in the United States aged 21-50 with at least one investment
account, just over six in ten investors (61%) believe that investing in stocks
is very important or important to helping them achieve their retirement
savings goals. The survey was conducted in August 2012 by Harris Interactive
for T. Rowe Price.

And while about half of investors (51%) surveyed say that they have roughly
the same tolerance for risk they had before the financial crisis, 37% say they
are now refraining from investing in stocks because of current economic or
market conditions. Investors' reluctance to invest in stocks is reflected in
data from the Investment Company Institute, which shows that net new cash flow
into stock mutual funds was negative in 30 of the last 48 months – including
15 of the last 16 – through September 2012.

Investors' aversion for stocks stands despite historical evidence showing that
stocks, as measured by the S&P 500 Index, have outperformed other asset
classes with an annualized total return of approximately 9.8% between 1926 and
2011[1]. Over the course of a long-term retirement savings program, an
under-allocation to stocks could lead to shortfalls in investors' account
balances, T. Rowe Price financial planners believe.

Selected survey findings

  oJust over six in ten investors aged 50 and under (61%) believe that
    investing in stocks is very important or important in helping them achieve
    their long-term retirement savings goals.
  oAccordingly, 37% of investors say that they are currently refraining from
    stock investing. Factors cited include the pace of the U.S. recovery,
    general market volatility, political uncertainty, rising health care
    costs, actual or potential unemployment, the pace of the global economic
    recovery, the pace of the U.S. housing market's recovery, the Eurozone
    debt crisis, and potentially higher taxes on income, dividends, and
    capital gains.
  oRisk aversion is also prevalent in investors' attitudes toward fixed
    income investing, with 76% of investors saying they are only somewhat or
    not at all willing to take on more risk to obtain a potentially higher
    yield.
  oThe crisis appears to have ushered in a new era of financial prudence:
    with respect to their personal savings, 81% of investors say they are
    saving about the same or more than they were before 2008.

Quotes

Stuart Ritter, CFP^®, senior financial planner with T. Rowe Price:

  o"The lack of faith in equities, even among long-term investors, is
    troubling. Historically, stocks have provided more long-term growth
    opportunities than bonds, short-term investments, or other vehicles that
    are generally considered to be more conservative. Investors aged 50 and
    under typically have enough time to overcome market setbacks and can
    decrease their exposure to stocks as they get closer to retirement age."
  o"Investors have experienced a lot of market turbulence and tough economic
    times over the last several years, so it's understandable from an
    emotional perspective that many of them – including younger investors –
    might be reluctant to invest in stocks. But people with decades to go
    before retirement need to do their best to block out the noise of the day
    and focus on the long term. For investors with a long time horizon and
    enough tolerance for volatility, stocks have always been the best asset
    class for growth potential and for staying ahead of inflation."
  o"Younger investors, especially those recently out of college, are used to
    having short-term goals measured in months. The idea of developing a
    long-term goal, such as saving for a retirement that might be 40 years
    away, is new to most of them. It requires patience, discipline, and a new
    way of thinking."

About the survey

The survey was conducted online within the United States by Harris Interactive
on behalf of T. Rowe Price from August 8-20, 2012, among 850 adults aged 21-50
who have at least one investment account. This online survey is not based on
a probability sample and therefore no estimate of theoretical sampling error
can be calculated. Figures for age, sex, race/ethnicity, education, region,
and household income were weighted, where necessary, to align them with their
actual proportions in the population.

Harris Interactive is one of the world's leading custom market research
firms. Known widely for Harris Poll and for pioneering innovative research
methodologies, Harris serves clients in 196 countries and territories through
its North American and European offices and its network of independent market
research firms. For more information, please visit www.harrisinteractive.com.

About T. Rowe Price

Founded in 1937, Baltimore-based T. Rowe Price is a global investment
management organization with $574.4 billion in assets under management as of
September 30, 2012. The organization provides a broad array of mutual funds,
subadvisory services, and separate account management for individual and
institutional investors, retirement plans, and financial intermediaries. The
company also offers a variety of sophisticated investment planning and
guidance tools. The Retirement Plan Services division currently serves more
than 3,500 retirement plan sponsors and more than 2 million retirement plan
participants. T. Rowe Price's disciplined, risk-aware investment approach
focuses on diversification, style consistency, and fundamental research.

[1] Source: Standard & Poor's. The annualized returns for bonds and Treasury
bills over the same period were 5.8% and 3.7%, respectively. Past performance
is not a guarantee of future results, and it is not possible to invest
directly in an index.



SOURCE T. Rowe Price Associates

Website: http://www.troweprice.com
Contact: Bill Benintende, +1-410-345-3482; Brian Lewbart, +1-410-345-2242;
Robert Benjamin, +1-410-345-2205, all of T. Rowe Price, Group