Published by Taylor Financial Group
In a recent research article, LPL Financial posed the following question: “Doesn’t anyone want to own stocks anymore?” This question is warranted, given that a recent Gallup poll concluded that U.S. participation in the stock market is currently at its lowest rate in 20 years. The results of the poll indicated that the percentage of U.S. adults invested in the stock market has dropped 11% since 2007.
What’s Going On?
The lack of U.S. investors’ participation in the stock market is surprising, since, historically, equities have been a strong driver of returns for balanced portfolios over a full market cycle. Various reasons are cited to account for this low participation rate. Business Insider pointed out that part of the reason may be that the majority of millennials do not invest in the stock market. A survey performed last year by Bankrate.com was even more telling, stating that 48% of all Americans have “money problems” that prevent them from investing. Moreover, a quarter of the survey respondents said their reason for staying away from the markets was that they simply did not understand stocks, while a small number of respondents felt that stocks were too risky or that they didn’t trust stock brokers. According to Bankrate’s 2016 calculations, 4 in 10 Americans owned stocks, including 51% of investors who are 36 to 51 in age (Generation X), and 48% who are age 52 to 70 (Baby Boomers) – proof that millennials do seem to be the least invested.
What Are We Doing?
We continue to encourage and educate our clients on the importance of investing a portion of their portfolio in the stock market. We believe that owning equities is an important part of a balanced and diversified portfolio. In many cases, for more conservative clients, we have utilized the Swan Defined Risk, a hedged-equity strategy that is designed to hedge against large stock market declines and provide stable returns over a full market cycle. We find that, for portions of a portfolio, this strategy provides exposure to equities while protecting against some of the downside associated with equities.
If you’re not sure how to invest in the stock market or are having trouble figuring out how to deploy your cash, let us help you! You don’t have to do it alone. Contact us with any questions or if you want to schedule an appointment.
LPL Financial Research, Doesn’t Anyone Want to Own Stocks Anymore? May 24, 2017
Business Insider, Why So Few Millennials Invest in the Stock Market, July 6, 2016
Bankrate, Millennials Slow to Start Investing in Stock Market, July 6, 2016
Gallup, Stock Market Poll, 2017
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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Stock investing involves risk including possible loss of principal. No strategy assures success or protects against loss.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not ensure against market risk.