Our clients and the people who read this blog, know the importance of investing in a globally diversified portfolio of stocks, bonds, and real estate in order to reach their long-term goals. However, according to a recent Gallup Poll from May 4, 2018, the average American remains skeptical of the stock market.
The leeriest are adults younger than age 35. Before 2008, 52% of those aged 18-35 had money in the stock market. The current number for 2017 and 2018 stands at 37%. This shows the effect the Great Recession had on younger investors. Even a decade later, they still lack confidence in the market.
Another reason for younger investors shying away from the stock market is an inadequate financial education and low financial literacy. A 2016 report prepared by the Financial Industry Regulatory Authority tested respondents financial knowledge through a series of 5 questions covering fundamental concepts of economics and finance that may be encountered in everyday life. They found that only 37% of Americans could answer 4 or more correct. Clearly, there is more work that needs to be done.
So what can you do?
- Educate yourself – Read books on investing! One of my favorites is Paul Merriman’s “Financial Fitness Forever.”
- Make sure to teach your children about finances and the huge advantage they have when starting early.
- Consult a Professional – A fee-based, independent & objective advisor is a good resource to clarify the information and help apply it to your unique situations.