Rate of stock ownership down sharply

[disneysteve]

I read today that in 2002, 67% of Americans owned stock either directly or through retirement accounts and mutual funds. Today, that number stands at just 55%.

Along with that, stock ownership is increasingly concentrated among the rich. The top 10% of Americans by wealth own 87% of all stock.

Given the state of the economy, I guess that's not entirely surprising, but at the same time, owning stock has never been cheaper or easier to do. Back when I started, there were mainly full service brokers who expected you to buy in even lots of 100 shares and charged you sky high commissions, plus you had to do everything in person or by phone. Today, you can buy a single share of stock or one share of an ETF and pay nothing in commissions. And you can trade 24/7 on your computer or phone.

How much of this do you think comes down to education? Do people just not get the value of investing in the market? You don't need to have a lot of money to get into the market like you used to. When we invested in our first mutual fund in 1992, the minimum monthly deposit was $50 but now you can start with way less than that.You could buy one share of a stock like Ford right now, for example, for under $7, less than the cost of a fast food meal. Lots of people could manage something like that once a month perhaps.

Why do you think the stock ownership has dropped so much?

[srblanco7]

I'll admit it's contrary to what I'd have thought - given the shift to IRAs and 401k/403b plans as retirement vehicles.

Certainly could be viewed as an indicator of the growing "wealth gap" and decline of the middle class. In addition, perhaps the market "crashes" in 2001, 2007, and 2020 may impact many folks willingness to invest in the stock market.

[cypher1]

I'd say the majority of it is due to lack of education and motivation. Priorities are still a big factor, but I feel I know a lot of people focusing on paying off debts and getting personal finances in order, with investing as an afterthought. Even with retirement vehicles in use, most people are more of a set it and forget it mentality.

[Jluke]

Still scared by the 2008-2009 financial crisis?

[disneysteve]

Still scared by the 2008-2009 financial crisis?

Could be, which goes back to the education piece. If people don't understand the cyclical nature of the stock market and what the long term track record looks like, they may stay away at their own peril.

More and more people are responsible for their own retirement savings. That means more and more people should be invested in stocks to amass what they need. Instead, a disturbing percentage of 401k money is sitting in low yielding fixed interest holdings. Those folks won't ever be able to retire comfortably.

[scfr]

If that's the number of people self-reporting that they own stocks, I wonder what percentage answered "no" but actually do own stocks through a mutual fund in their retirement plan and they just don't realize what they have.

[disneysteve]

If that's the number of people self-reporting that they own stocks, I wonder what percentage answered "no" but actually do own stocks through a mutual fund in their retirement plan and they just don't realize what they have.

The 10% own 87% figure comes from the Federal Reserve but the 55% figure is from polling data so you may be right.

[Singuy]

Today as this today? Not only are people scared of the financial crisis of 2008, they are even more scared of the current crisis we have now and most think drop 2.0 is coming. Also I know many people of course, pulled out their retirement during the Covid drop and couldn't find a good entry price since the recovery was just as violent, hence waiting for drop 2.0. March-June really screwed people up. Retirement accounts should just lock people out during market crashes because poor decisions are always made during these times.

Not many people predicted that the market would recover so quickly. I was advocating that due to low interest rates, there wouldn't be market crashes like we had when interest rates were high due to no where else to put your money except equities. So far the theory is holding up.

[~bs]

I doubt that number is true, if it is, it's surprising. Consider that 56% of all workers participate in a workplace retirement plan, which includes stocks. True that many might be bonds or fixed income only, but that's a pretty high percentage for workplace only ownership.

What source is your data from?



All workers: private-sector, state and local government workers. (139 million full and part-time workers):

Percentage of workers participating in a workplace retirement plan:	56
Percentage of workers participating in a pension plan:	21
Percentage of workers participating in a retirement savings plan:	43
Percentage of all workers participating in a retirement plan who are in a pension plan:	37*

*(29.1 million workers. Pension Rights Center calculations based on NCS data.)

[JBinKC]

Today as this today? Not only are people scared of the financial crisis of 2008, they are even more scared of the current crisis we have now and most think drop 2.0 is coming. Also I know many people of course, pulled out their retirement during the Covid drop and couldn't find a good entry price since the recovery was just as violent, hence waiting for drop 2.0. March-June really screwed people up. Retirement accounts should just lock people out during market crashes because poor decisions are always made during these times.

Not many people predicted that the market would recover so quickly. I was advocating that due to low interest rates, there wouldn't be market crashes like we had when interest rates were high due to no where else to put your money except equities. So far the theory is holding up.

Agreed its all about money printing and the few viable options to invest in due to zero/ negative rates. In the top down effect the investment banks get this money first and they come to the conclusion that stocks are the best avenue for investment. In addition, since 2008 I clearly remember the stock market tend to rally when the economic data was bad because of more expectations of the fed intervening. My worry is when they begin to taper off the money printing. So far in my lifetime the only leading indicator and predictive factor to rising stock prices has been fed liquidity/money printing.

[Captain Save]

I doubt that number is true, if it is, it's surprising. Consider that 56% of all workers participate in a workplace retirement plan, which includes stocks. True that many might be bonds or fixed income only, but that's a pretty high percentage for workplace only ownership.

What source is your data from?



All workers: private-sector, state and local government workers. (139 million full and part-time workers):

Percentage of workers participating in a workplace retirement plan:	56
Percentage of workers participating in a pension plan:	21
Percentage of workers participating in a retirement savings plan:	43
Percentage of all workers participating in a retirement plan who are in a pension plan:	37*

*(29.1 million workers. Pension Rights Center calculations based on NCS data.)

I don't see how this doesnt make sense ot you .. can you explain why you think it might not be true? I don't think I'm following your train of thought properly.

[disneysteve]

56% of all workers participate in a workplace retirement plan, which includes stocks.

Retirement plans offer stock investment options, but not everyone uses them.

This article is from 2 years ago but gives similar numbers to what I gave in my original post: https://www.nytimes.com/2018/02/08/b...s-economy.html

[bjl584]

I guess the first place to start would be to ask how accurate the survey is.
Beyond that, probably lack of trust, understanding, and education.

[disneysteve]

I guess the first place to start would be to ask how accurate the survey is.

The numbers come from numerous surveys and sources but all paint a similar picture.