Confidence: Lingering inflation drives a crisis of investor confidence

It’s been five years since the pandemic broke global supply chains and three years since consumers experienced the biggest inflation spikes in decades. And investors are not past the sticker shock. Now, even as inflation nears central bank targets, few think it’s truly under control.

Globally, just 41% of investors think elevated inflation is finally in the rearview mirror. But this is a case in which a middling average fails to tell the whole story. Country to country and region to region, inflation concerns vary greatly.

In the US, only 26% are convinced that inflation is behind them, and 61% rank it as their top financial fear. Even as inflation approaches 2% goals set by central banks, nothing will bring everything back to 2019 levels. Prices have escalated over the past five years, and they’ll stay at those higher levels.

Talk of tariffs and trade wars leave investors waiting for yet another price shock.

For example, Japan has consistently exceeded the central bank’s 2% inflation target for three years and came in at 3.6% in March, but only 20% of investors think they’re past rising prices. Investors in Taiwan (20%), South Korea (28%) and Hong Kong (27%) do not yet see the light at the end of the tunnel.

However, investors in Latin America are feeling relief as the disinflation process continues, monetary policy is easing, commodity exports are picking up, and supply chains are improving. As a result, 65% in Argentina/Uruguay, 60% in Mexico, and 56% in Colombia/Peru say escalating prices are behind them.

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2025 Natixis Global Survey of Individual Investors

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Who thinks that inflation is in the rearview mirror - Bar chart showing investors by country with Argentina/Uruguay as the highest at 65% each

Investors are losing ground to rising prices

Sticky inflation has left an indelible mark, and investors sense they are losing ground. About two-thirds (66%) say they are saving less due to higher everyday expenses – a sentiment that resonates most in Australia (80%), Taiwan (78%) and Hong Kong (77%).

Investors also report that, even as they have less to save, the gains on what they have been able to invest have been whittled away by inflation (59%), a sentiment that runs exceptional- ly strong with investors in Taiwan (83%) and Colombia/ Peru (70%).

The squeeze is being felt even among high-net-worth (HNW) investors ($1M+ investable assets), as 60% of millionaires say they are saving less because of inflation. Another 56% of this group are concerned about maintaining their net worth and say inflation has whittled away at their investment gains as well.

60% of millionaires say they are saving less because of inflation

The impact on savings and investments is hard felt, and 38% of investors saying say long-term goals are more fantasy than reality. The despair is particularly deep among those investors at the lower end of the wealth spectrum: 45% of mass market investors ($100,000–$300,000 investable assets) and 41% of mass affluent investors ($301,000–$500,000 investable assets) see their goals slipping further out of reach.

Uncertainty grows as geopolitical and macroeconomic norms are tested

After 15 years of low interest rates, high returns, and relatively smooth sailing, the world suddenly feels less predictable in 2025. Geopolitics look uncertain as two wars continue to play out, trade norms in place for decades are challenged, inflation continues to loom over much of the global economy, and markets have abruptly turned volatile.

In the face of this upheaval, 70% of investors say the world feels unstable and they’re worried about their finances. The statement resonates most in Asia, where uncertainty over trade is a key factor: 79% in Korea are worried, so are 77% in Japan, 75% in Singapore, and 74% in Hong Kong. However, the concerns aren’t limited to Asia, as 75% in France are worried as well.

Inflation may be a foundation for concern, but investors have more to worry about. High interest rates, eroding consumer confidence, and political uncertainties lead 43% to worry about an economic collapse.

Concern remains generally consistent for investors across the 21 countries included in the survey, except for Korea. Slow growth, ongoing political turmoil, and trade risks led 62% of investors there to worry about economic collapse.

Despite impressive returns in 2024, investors are now worried about a potential market crash. Even ahead of the Trump administration’s Liberation Day tariff announcement, markets had become volatile. Add to it recession fears and sticky inflation, and 41% of investors are worried about a market crash as well. Crash concerns are highest in Argentina/ Uruguay (56%) and the US (50%).

Ongoing wars in Gaza and Ukraine, coupled with changing political leadership globally have 39% of investors worried about international conflict. Given continued overtures from China challenging their country’s sovereignty, concern ran highest among those in Taiwan (49%).

Investors anticipated market disruption

When it comes down to it, few think this new environment is good for markets. Asked for their outlook in the first quarter, a small number of investors remained optimistic that 2024’s rally would continue. Just 35% thought nothing could stop markets from going higher. Investors in Italy (47%), France (41%) and the US (41%) were most likely to hold this view.

On the other end of the spectrum, only 17% thought the rally would run out of gas. That number may not indicate just how pessimistic some investors were at the start of the year, as another one in five (21%) sensed the end was near saying, “I’m getting out while I can.”

About one-quarter (23%) were perplexed by all the new factors coming to light and said they didn’t know what to do. With many worried that the end was near, 22% had regrets, saying they missed their chance.

Top 5 investment concerns

Bar chart showing inflation, economic collapse, market crash, international conflict, and taxes

Shifting tax policies add to investors’ anxieties

Anxiety strikes close to home with taxes too. Investors rank taxes fifth on their list of investment concerns (28%) and third among their financial fears (34%), and they recognize that there is little they can control. Fear is greatest in Colombia/ Peru (49%), Argentina/Uruguay (46%), Mexico (45%) and the US (42%), where taxes rank among their top five investment concerns.

The concern may be well reasoned, as six out of ten investors say they understand how taxes can impact their investments. And as return expectations decline and concerns of a market collapse rise, 70% of those surveyed say after-tax returns are more important than pretax.

The fear may be founded in the challenge facing both policy- makers and investors. On one side of the equation are costly 21st-century priorities, including reducing record public debt, a critical need to modernize infrastructure, and the pressure to fund pensions and public retirement benefits, among other issues.

Public debt has swelled to record levels in the past five years, and 77% of investors globally are worried that government deficits will lead to higher taxes. Investors in Taiwan (85%), Japan (83%) and Colombia/Peru (84%) show the greatest concern for imminent tax hikes.

Compounding the deficit problem are the higher interest rates needed to squelch inflation. Higher rates mean governments will have to pay more interest on their outstanding bonds and loans, increasing the deficit even more and pressuring policymakers to generate revenue. This is one reason for the surprising talk about a millionaire tax in the US earlier this year.

On the other side of the equation are individual investors grappling with the effects of inflation. Rising costs certainly put a crimp on household budgets and stalled savings. Re- cent wage gains may have helped to alleviate some of that pain, but some investors have realized that “the more you make, the more they take,” as higher wages have pushed some into higher tax brackets.

One thing is for certain. Somebody’s going to have to pay the bill and investors think they’re the likely candidates. Globally, 68% of investors and 66% in the US say these shifting policies make it hard to understand what their tax situation will be. Less than half (48%) overall and just 50% of HNW investors expect tax policies will benefit them in the next few years. Overall, the skepticism is greatest among investors in Japan (29%), France (37%) and the UK (35%).

Top 5 financial fears

Bar chart showing higher everyday costs, large unexpected expense, taxes, healthcare costs, and job security

About the survey

Natixis Investment Managers, Global Survey of Individual Investors, conducted by CoreData Research in February and March 2025. Survey included 7,050 individual investors in 21 countries.

Disclosure

The views and opinions expressed may change based on market and other conditions. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted.

Actual results may vary.

All investing involves risk, including the risk of loss. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

Natixis Distribution, LLC is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.

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