Finance experts and market analysts are encouraging investors to put their money into the stock market as numerous stocks are hitting record highs. Wall Street is also pleased because the Federal Reserve will likely keep interest rates low for until at least until late 2015 and its quantitative easing endeavor is still taking place.
Despite this, Americans just aren’t interested in the stock market, according to a new survey by Bankrate. The poll discovered that nearly three-quarters (73 percent) are not persuaded to enter into the stock market now that interest rates are near zero on savings accounts and cash deposits. Close to one-quarter (22 percent), meanwhile, are more inclined to do so.
College graduates and households earning at least $75,000 a year were more inclined to invest (35 and 34 percent, respectively) compared to the non-educated and households making less than $30,000 annually (17 and 13 percent, respectively).
“Americans may be avoiding the buy-high, sell-low habit seen in previous market cycles, but only because they’re not buying at all,” said Greg McBride, Bankrate Chief Financial Analyst, in a statement. “An overly conservative investment stance compounds the problem that so many Americans have of not saving enough for longer-range goals like retirement.”
We reported this week that Nobel laureate economist Robert Shiller urged investors to start allocating their wealth into the stock market and stocks should be an extension into an individual’s portfolio. He conceded that stocks are quite high on a valuation basis, but it would still be a good time to become a bull.
During the Wednesday morning trading session, U.S. stocks plummeted after two reports disappointed the market. Sales of new single-family homes dropped significantly by 14.5 percent, while the manufacturing purchasing managers’ index (PMI) for April slipped to 55.4.
This economic data caused the S&P 500 to fall three points, the Dow Jones Industrial Average slipped 24 points and the Nasdaq Composite plunged 27 points.
Other Survey Findings
The savings situation among American households doesn’t appear to be brightening. According to the survey, 32 percent of respondents said they were less comfortable about the amount of money they maintain in their savings compared to a year ago. Nearly half (45 percent) felt about the same, while one-fifth were more comfortable.
When it comes to debt loads, the statistics are pretty much the same. One-quarter were less comfortable about their debt compared to 12 months ago, while 50 percent felt about the same. Twenty-one percent were more comfortable.
Employment security appears to be somewhat improving as close to one-quarter (24 percent) said they felt more secure about their job security, while 16 percent were less secure. Fifty-nine percent felt about the same.
Americans’ overall personal financial situation is mixed: 29 percent felt better about their personal financial situation compared to a year ago, 25 percent felt worse and 45 percent felt about the same.
The Bankrate financial security index (FSI) indicates a mediocre feeling of security – an index value higher than 100 shows a higher level of security and a value lower than 100 highlights a diminished level of security. This month, the FSI decreased from 102.5 in March to 100.
