The John Hancock Investor Sentiment Index, based on a survey of 1,005 investors by Matthew Greenwald & Associates, fell to 10 in the third quarter, down from 18 in the second quarter. When John Hancock launched the index in the first quarter of this year, the reading was 22. To participate in the survey, respondents needed household income of at least $75,000 and assets of $100,000.

John Hancock noted that the survey was conducted in mid-August, when Standard & Poor’s downgraded the U.S. credit rating and the markets became highly volatile.

The survey also showed that investors are more comfortable putting their money in bonds and cash than in the stock market and that 26% believe they are not in a better financial position than they were two years ago.

Only 41% think now is a good time to invest in stocks or stock mutual funds (38%), down from 58% and 53%, respectively, in the second quarter.

An overwhelming majority, 73%, said they are pessimistic about the long-term future of the American economy. Sixty-seven are concerned about the nation’s debt, up from 61% in the second quarter, and 48% are very concerned about the strength of the dollar. Fifty-three percent are concerned about the level of unemployment, up from 44% in the second quarter.

Nonetheless, 95% say they are long-term investors and 89% describe themselves as savings-oriented. Sixty-six percent say now is a good time to contribute to 401(k) plans or to IRAs (67%). However, in the second quarter, 80% said it was a good time to invest in their 401(k) and 79% said it was a good time to invest in an IRA.

“It seems clear from our survey that investors’ concerns have grown with respect to the national debt, the strength of the dollar and the level of unemployment,” said Bill Cheney, chief economist for John Hancock. “However, other concerns have lessened, such as worries about oil and gas prices, unrest in the Middle East, and even inflation, as fewer people predict inflation rates of 4% or higher. Despite these concerns, people still understand the importance of investing and planning for retirement.”

-- This article first appeared on Money Management Executive.