http://money.cnn.com/2015/04/10/investing/investing-52-percent-americans-have-no-money-in-stocks/index.html?iid=Lead
According to the article more American adults drink coffee daily than have money invested in the stock market. Less than half, or 48%, of American adults have money in stocks. Compared to that, about 61% of adults have at least a cup of coffee daily. The low number is an alarming trend for America's financial future. Stock ownership peaked in 2007 just before the worst financial crisis and Great Recession. "Despite the market hitting record highs, real investors have dramatically increased their allocation to cash," says Suzanne Duncan, global head of research at State Street's Center for Applied Research. The stock market is only making the rich richer. The biggest problem is that people don't have enough money to invest. Median household income is much high than it was in 1995, but people do not feel comfortable investing their money because they are unsure of the market. Only over a quarter of adults under 30 reported having money in stocks or funds that invested in stocks. Also, people do not feel educated enough about the stock market to invest and they think it's to risky. So what does this say about the future of the stock market? How can we encourage more people to invest?
6 comments:
The article suggests that people don't invest because 1) They don't have the money and 2) They don't have knowledge.
So, 1)People should stop spending money on Starbucks coffee and understand compounding.
2) People do not realize the importance of investing and so they do not take much initiative to know the financial markets.There are many websites online that make personal financing very simple.
I agree with Erica. I also believe that consumer confidence and low interest rates. The government has encouraged spending, not saving and therefore, people have not been saving. But I do believe that it has a lot to do with people not being knowledgable about saving.
When it comes to money, many people are irrational. This can be observed in a myriad of places. People pull money out of the market at troughs and buy when the market is high because of the need to feel financially secure. We live in a climate where many people will not take financial risks (and this can be rightfully so). I believe that increased financial literacy, along with a stomach for calculated risk, can help encourage people to invest.
I think there is another important reason for not investing, that is people are in fear of risks. The government can hold free speeches in communities to talk about stocks. People would feel more incentive to put money in stock.
I think people usually think they would need to have a lot of money to invest. Little do they know wealth can be built little by little. It's important to make personal finance one of the core classes in high school because everyone needs it. One is never too young to learn about building wealth
A lack of liquid money for most people to invest and a lingering fear of market dives from the 2007-10 G.F.C. likely contribute to a risk-aversion present in the current investment market as seen by this data, and might equalize once consumer confidence remains consistently high.
Post a Comment