A recent Gallup poll had some very interesting numbers on stock market participation of Americans, particularly millennials.
For starters, just 52% of Americans have ANY money invested in stocks!
That low participation rate in stock investing is tied with 2013 for a record low in the 19 years that Gallup has been running this survey. And there has been a downward trend since 2007 (a massive 13 point drop!).
Given that 60% of all American workers have access to 401K’s, HSA participation is at an all time high, low-cost and hands-off passive index investing options for amateur investors are more prevalent than ever before, and access to IRA’s and brokerage accounts is easier and cheaper than ever before, this is a surprising and really disturbing trend.
Millennial Stock Market Participation has Declined the Most
Sadly, those who stand to benefit the most over the long-term from investing – millennials – have even more disturbing numbers, with the stock market participation rate dropping from 52% to 38% since 2007, the largest drop of any age group.
The poll didn’t really go into the “why” behind this downward trend, but I think that’s the important question to ask and for each of us to answer.
Is it a fear of investing, prompted by huge dip during the start of the Great Recession? (interesting note: even as the market bottomed in 2009 and rebounded over the next 5 years for huge gains, market participation still declined each year)
Is it too short-term of a focus in performance?
Is it a belief that better returns can be had elsewhere?
Is it simply lack of financial means to invest in the first place?
Is it all of the above?
Or is it something else entirely?
Whatever the reason, there’s this for incentive…
Look, I get it. After the Great Recession, investing can be frightening.
However, if you have the means to invest, yet choose not to, you’re only screwing your future self.
Compound investment returns are a powerful thing that you don’t want to miss out on:
“$1 saved in your twenties can be the equivalent of $10 saved in your fifties, if invested over time.
$10.06 to be exact – at an average annual rate of return of 8% on your investments over 30 years. Even if you factor in 2% annual inflation, you’d have 556% of the buying power for every dollar you save today.”
Outside of real estate (and only in certain markets), you’re not going to find a better return on investment than the stock market over the long-term.
So get out there, start investing in small amounts as a beginner, avoid panic selling, and focus on the long view.