If all they asked was "Do you, jointly or with a spouse, have any money directly invested in the stock market right now--either in an individual stock, a stock mutual fund, or in a self-directed 401(k) or IRA," with no additional explanation--I would
seriously challenge the accuracy of the answers, although of course the relative year-to-year responses might still be meaningful.
I think a
significant number of 401(k) savers have no idea what their asset composition is.
I base this on, yes, a single anecdotal data point--a colleague who told me in late 2008 that he couldn't hack the volatility and had sold everything in his 401(k) and gone entirely to the money market. When I asked him, gingerly, if he had been 100% in stocks, he answered "Oh, no, a lot of it was international."
I did not probe, but this was a Fidelity managed 401(k) with a variety of Fidelity funds. About 3/4 of the choices all of them were stock funds (and most of the rest were Freedom target-date fund and "asset manager," which had medium-to-high stock percentages).
Some of them had the word "stock" in their name ("Fidelity Low-Priced Stock Fund," "Fidelity Small-Cap Stock Fund,") and some did not ("Fidelity Magellan Fund," "Fidelity Diversified International Fund.") And I think that's significant. I think that many people do not understand that they have money "directly invested in the stock market right now" if they have chosen funds that don't have the word "stock" in their name. The fact that
some of the funds do have the word "stock" in their name reinforces that belief.
If you asked people "Are you invested in the stock market" and probed, I believe many would answer, "No, it's all in a retirement fund."
Yes, of course there's a pie chart printed on most statements these days. Yes, of course, to someone with a college education and the most rudimentary investing smarts--like knowing the meaning of the word "equity" (what, it's not the actors' union?) the following language is clear:
Objective
Seeks high total return until its target retirement date. Thereafter the fund's objective will be to seek high current income and, as a secondary objective, capital appreciation.
Strategy
Investing in a combination of underlying Fidelity domestic equity, international equity, bond, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year 2055. Allocating assets among underlying Fidelity funds according to an asset allocation strategy that becomes increasingly conservative until it reaches approximately 15% in domestic equity funds, 5% in international equity funds, 40% in bond funds, and 40% in short-term funds (approximately 10 to 15 years after the year 2055). Ultimately, the fund will merge with Fidelity Freedom Income Fund.
Imagine a 20-year-old worker
who has been defaulted into this fund in their 401(k), skimming through the pack of new-hire material. A year later, imagine asking this worker "Do you have any money directly invested in the stock market?"
What percentage of them do you think would answer "yes?"
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.