Just about all of us would like to be rich; we would also be happy with being financially secure now and in retirement. But that status can be hard to achieve, and many people are not taking effective steps to improve their financial condition.
There's a particular move you could make that nearly half of Americans are not making, and it offers one of the best ways to build wealth over the long run: investing in stocks.
Image source: Getty Images.
Survey says...
At the end of last year, only 52% of Americans reported having money invested in the stock market, per a Gallup survey. That was the lowest level in the 19 years that Gallup tracked this number. In 1998, 60% owned some stock, with the percentage rising to 65% in 2007, before the last recession. (Note that the percentage includes those owning individual stocks, shares of one or more stock mutual funds, and stocks in 401(k)s or IRAs.)
A closer look reveals more worrisome details:
| Average stock ownership | 2001 to 2008 | 2009 to 2017 |
|---|---|---|
| U.S. adults | 62% | 54% |
| Ages 18 to 29 | 42% | 31% |
| Ages 30 to 49 | 71% | 62% |
| Ages 50 to 64 | 69% | 62% |
| Ages 65+ | 53% | 54% |
| Men | 65% | 56% |
| Women | 59% | 52% |
| Married | 75% | 69% |
| Unmarried | 46% | 38% |
Data source: Gallup.com.
Many of the groups of people who could most use retirement savings have lower ownership levels than their counterparts. Women, for example, tend to earn less and live longer than men, making having ample savings extra critical. Unmarried people, meanwhile, are often getting by on only a single income, without a spouse's income or savings to help.
Younger Americans aren't necessarily more financially vulnerable than older ones, but the fact that they're so unlikely to own stock is a crying shame, since their savings have so much time to grow.
What's going on?
Stock ownership rates before the recession were still not great. Ideally, most Americans would own some stock, giving them, literally, an ownership stake in our growing economy. It's not surprising that the crash of 2007 and 2008 scared many people out of stocks, though. The resulting spike in unemployment along with the housing crash put many people on shaky ground: Stock ownership can become an unaffordable luxury if you're struggling to put food on the table and are already underwater on your mortgage.
The recession ended, though, beginning in 2009. The subsequent recovery has actually been one of the longest, too. The current year is on track to become the seventh out of the past nine years with a double-digit increase in the S&P 500. Better still, the two years without double-digit gains still posted single-digit gains, not losses: