Why do so many Americans not own stocks?

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xcdq
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Why do so many Americans not own stocks?

Post by xcdq » Tue May 08, 2018 2:16 am

I don't understand it.

People complain about not having enough money. The fact is, the richest people own businesses, or are part-owners. That should give people a clue to buy stocks in companies. People can save up some money from their employment, in order to buy stocks.

Why don't more people buy stocks, and have the dividends automatically reinvested, in order to build wealth?

I've come to the conclusion that... owning stocks is one of the most important things in life. If you want to build wealth, you should own stocks. You are not going to get anywhere working. You are just going to work everyday, complain about not having enough money, and that's it.

Owning a business, or owning a lot of stocks, is how you make the most money. A lot of stocks are not much money at all to buy, so there's really no reason not to buy them.

Why do so many Americans not own stocks? Why do so many Americans just work everyday, complain about lack of money and never buy a stock?

Keri22
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Re: Why do so many Americans not own stocks?

Post by Keri22 » Tue May 08, 2018 2:36 am

Perhaps they are poor?

kagantx
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Re: Why do so many Americans not own stocks?

Post by kagantx » Tue May 08, 2018 2:46 am

There are several reasons.

1. A majority of people have almost no savings at all. Before you can buy stocks you need to save money. This is the most important reason.

2. The return from stocks is much lower for most people than the indexes say due to fees and bad market timing decisions. Specifically, people earn only half the nominal market return on average (5%). That means that the realized equity risk premium is much smaller than the nominal one. So for the non-Boglehead active investor, stocks aren't actually as great a deal vs. bonds as the raw numbers show.

3. Stocks are risky. It's true that over the long term they go up, but people are bad at thinking long term. When someone loses $100,000 in the markets, the response is often to sell and never buy stocks again.

zuma
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Re: Why do so many Americans not own stocks?

Post by zuma » Tue May 08, 2018 2:46 am

Because most Americans are working so they can buy food and pay their bills.
Living Paycheck to Paycheck is a Way of Life for Majority of U.S. Workers, According to New CareerBuilder Survey
Study Highlights:
- 78 percent of U.S. workers live paycheck to paycheck to make ends meet
- Nearly one in 10 workers making $100,000+ live paycheck to paycheck
- More than 1 in 4 workers do not set aside any savings each month
- Nearly 3 in 4 workers say they are in debt today - more than half think they will always be
- More than half of minimum wage workers say they have to work more than one job to make ends meet
http://press.careerbuilder.com/2017-08- ... der-Survey

Longtermgrowth
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Re: Why do so many Americans not own stocks?

Post by Longtermgrowth » Tue May 08, 2018 2:53 am

Most around my age (20's, 30's) think it's a ripoff because of possible fluctuations of 50% or greater in net asset value of a stock fund. They also don't seem to know much about index funds in general, or have any type of concept of deep risk as Bernstein talks of.

They have any excess funds (beyond what they need as an emergency fund) in a local bank savings account, paying well below what inflation is eroding away, and look at me like I'm speaking another language when telling them the nominal value of their account may be slowly increasing, but the real purchasing power is decreasing.

All that said, I think if one really knows what they are doing with real estate, between flipping properties and rentals, it could easily pay off more in the long run (I am definitely not willing to get into that type of thing myself, though. It's just too easy to use index funds =)

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JoMoney
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Re: Why do so many Americans not own stocks?

Post by JoMoney » Tue May 08, 2018 3:44 am

Most Americans have less than $1,000 in savings.
Even among those with higher incomes, Americans are really bad at saving.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

TwstdSista
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Re: Why do so many Americans not own stocks?

Post by TwstdSista » Tue May 08, 2018 4:37 am

Some people simply can't. Imagine living on minimum wage, or even $15/hour. Even a two earner couple. Then add kids, childcare, etc.

Some people make bad choices. Must have the latest iPhone, iPad, car, eats out for every meal, buys coffee from DD/Sbux several times a day, frequents bars/night clubs, actually goes on vacation when they have a vacation, engages in expensive habits (smoking, etc.), has pets, the list goes on and on and on and on....

And some people don't even realize that it is a possibility. They don't have the knowledge (for whatever reason -- no access to a retirement fund, lack of general intelligence, lack of peers/family with said knowledge, etc.)

I work downtown in my small city, and I see SO many people who likely do not "own stocks" and very likely never will. I am so grateful I went to grad school, and I had my sister as an example -- I could have been one of them. Easily....

B. Wellington
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Re: Why do so many Americans not own stocks?

Post by B. Wellington » Tue May 08, 2018 5:00 am

JoMoney wrote:
Tue May 08, 2018 3:44 am
Most Americans have less than $1,000 in savings.
Even among those with higher incomes, Americans are really bad at saving.
+1 Add in the average car payment in America ($503 each) And the average house payment ($1061) per month. Then food, clothing, insurance, fuel, phone, cable, etc. etc. You then need to manage what is "leftover" well.

GratefulinNC
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Re: Why do so many Americans not own stocks?

Post by GratefulinNC » Tue May 08, 2018 5:11 am

If you want outsized wealth, insert yourself into the commission stream.

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Psyayeayeduck
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Re: Why do so many Americans not own stocks?

Post by Psyayeayeduck » Tue May 08, 2018 5:26 am

From the top of my head:

1) Income has not kept up with expenses. Less money goes into savings because the same items you had before are now cost more for the same or lesser level of quality/quantity.

2) It is expensive being poor. It only takes one missed bill or of the like to get slap with another fee for being late. When one is prioritizing survival over bills because of lack of money, it is hard to keep up with everything.

3) When debt is not handled correctly, it can spiral out of control. Paying the minimums of CC debt or high interest loans will make things linger longer giving interest room to grow. When people see "cheap" minimal monthly payments, the conclude that they can afford which is usually far from the truth. It's a disguise to entice the financially stupid.

4) Savings is not prioritized. People have a tendency to spend every single penny they earn. They think of the now instead of their future.

5) A bit controversial but people have children when they shouldn't. Raising a kid is expensive. Throw in financial instability and you got a whole mess of expenses that one doesn't think of until it is too late. Now you have expenses for a party of two (minimal) for the next 19 years or so.


Mind you, I haven't even touched investing at all. There are all these barriers that one has to go through to even think about investing. A change of attitude, spending habits, earning potential, and not doing anything that would permanently alter one's life path all requires hard work and discipline. Given that the general population have the memory attention of a goldfish (my apologies to goldfish readers), I doubt there will be a paradigm shift anytime soon. Yes, more people are becoming financially savvy but it pales in comparison to the people who aren't.

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Re: Why do so many Americans not own stocks?

Post by WallStreetPhysician » Tue May 08, 2018 5:49 am

xcdq wrote:
Tue May 08, 2018 2:16 am
I don't understand it.

People complain about not having enough money. The fact is, the richest people own businesses, or are part-owners. That should give people a clue to buy stocks in companies. People can save up some money from their employment, in order to buy stocks.

Why don't more people buy stocks, and have the dividends automatically reinvested, in order to build wealth?

I've come to the conclusion that... owning stocks is one of the most important things in life. If you want to build wealth, you should own stocks. You are not going to get anywhere working. You are just going to work everyday, complain about not having enough money, and that's it.

Owning a business, or owning a lot of stocks, is how you make the most money. A lot of stocks are not much money at all to buy, so there's really no reason not to buy them.

Why do so many Americans not own stocks? Why do so many Americans just work everyday, complain about lack of money and never buy a stock?
It's because the vast majority of Americans don't believe that stocks are the best long-term investment.

This Gallup poll has consistently shown that <30% of Americans believe that stocks are the best long-term investment, with real estate being the top choice. Gold, bonds, and savings accounts also get not insignificant number of votes in the poll.

http://news.gallup.com/poll/1711/stock-market.aspx

-WSP

Stormbringer
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Re: Why do so many Americans not own stocks?

Post by Stormbringer » Tue May 08, 2018 6:08 am

1) Behavioral problems.
2) Financial illiteracy.
3) Bad luck.
"Compound interest is the most powerful force in the universe." - Albert Einstein

jehovasfitness
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Re: Why do so many Americans not own stocks?

Post by jehovasfitness » Tue May 08, 2018 6:14 am

Mean income is what 50k? Try raising a family on that and then owning stocks

jehovasfitness
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Re: Why do so many Americans not own stocks?

Post by jehovasfitness » Tue May 08, 2018 6:15 am

JoMoney wrote:
Tue May 08, 2018 3:44 am
Most Americans have less than $1,000 in savings.
Even among those with higher incomes, Americans are really bad at saving.
Hard to save when wages have been stagnant since the 70s and inflation of major life needs have shot up

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jharkin
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Re: Why do so many Americans not own stocks?

Post by jharkin » Tue May 08, 2018 6:16 am

Psyayeayeduck wrote:
Tue May 08, 2018 5:26 am

2) It is expensive being poor. It only takes one missed bill or of the like to get slap with another fee for being late. When one is prioritizing survival over bills because of lack of money, it is hard to keep up with everything.
Bingo. Often those of us blessed with 6 figure incomes and 800+ credit scores dont realize how many special advantages we get. Walk into a car dealer and they fall over themselves to offer us 2% or even 0% financing. What you may not have noticed is the minimum wage family struggling down the street with bad credit walks into that same shop and they get offered sub prime 8% financing. So their Corolla actually costs them more than your Lexus.

And their credit cards probably carry whatever the max legal rate is... 25% or 28%.... and since they barely make enough to pay rent anything unexpected goes on that card and they basically make minimum payments forever and end up spending a grand to pay back the $50 they spent on little Jimmy's school supplies.

And so on. I'm exaggerating but you get the point. Once you are on this treadmill, the system has designed it so its nearly impossible to get off.

columbia
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Re: Why do so many Americans not own stocks?

Post by columbia » Tue May 08, 2018 6:31 am

Conversation a few years ago with someone, who was in their late teens during the last major crash (and old enough to remember the details):

“The stock market is like gambling in Vegas...”

Whether the numbers indicate 20 somethingd are investing less in stocks, because of fear and student loan debt, I can’t speak to that. Perhaps someone here can.

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djpeteski
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Re: Why do so many Americans not own stocks?

Post by djpeteski » Tue May 08, 2018 6:33 am

IMHO it is a chicken and egg thing; or something that builds upon itself. When a person starts making good decisions, it builds upon itself and other things goes well in one's life. Income increases, credit scores go up, and then if you make some other good decisions with those things, then more good things happen.

To me, the best illustration is smoking. Right now the national average for a pack of cigs is $5.51. If you smoke a pack a day you spend 165.3/month, 1983/year, or about 93k between 18 and 65. That assumes the price will never increase. If you invested that money instead in an S&P 500 fund you'd end up with 1.9 million or so. That is if you did no other investments. People find the money to smoke, why cannot they find the money to invest?

Among the overlooked factors in all of this is two things: budgeting and an emergency fund. For some, and I was one of them, without an emergency fund you could be forced to withdraw money from investments an an in opportune time. My AC broke for the second time this year this weekend. Efund to the rescue. With an efund, you can invest with impunity.

Also budgeting and not being tempted to buy a new car when the investment account reaches about 10k, or a new house when it gets about 20k. That will derail this whole plan.

The opportunity to be wealthy is available to all, but it starts with making good small decisions and increasing the size of those good decisions.

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Re: Why do so many Americans not own stocks?

Post by cherijoh » Tue May 08, 2018 6:35 am

kagantx wrote:
Tue May 08, 2018 2:46 am
There are several reasons.

1. A majority of people have almost no savings at all. Before you can buy stocks you need to save money. This is the most important reason.

2. The return from stocks is much lower for most people than the indexes say due to fees and bad market timing decisions. Specifically, people earn only half the nominal market return on average (5%). That means that the realized equity risk premium is much smaller than the nominal one. So for the non-Boglehead active investor, stocks aren't actually as great a deal vs. bonds as the raw numbers show.

3. Stocks are risky. It's true that over the long term they go up, but people are bad at thinking long term. When someone loses $100,000 in the markets, the response is often to sell and never buy stocks again.
I know people who were 100% in tech stocks (or aggressive growth funds that invested in tech stocks) before the 2000 Dotcom bust, who sold everything after bubble burst and never invested in stocks again. I'm pretty sure they had piled in after tech stocks took off, so they also epitomized your point #2 as well.

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Cycle
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Re: Why do so many Americans not own stocks?

Post by Cycle » Tue May 08, 2018 6:40 am

For 15 million American adults they couldn't read and understand you post, so I suppose their functional illiteracy might prevent them from investing.

https://en.m.wikipedia.org/wiki/Functional_illiteracy

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nisiprius
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Re: Why do so many Americans not own stocks?

Post by nisiprius » Tue May 08, 2018 6:48 am

John C. Bogle said:
Here’s how I recall the wonderful story that sets the theme for my remarks today: At a party given by a billionaire on Shelter Island, the late Kurt Vonnegut informs his pal, the author Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch 22 over its whole history. Heller responds, “Yes, but I have something he will never have . . . Enough.”
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.

SelfEmployed123
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Re: Why do so many Americans not own stocks?

Post by SelfEmployed123 » Tue May 08, 2018 7:03 am

Every year millions of 18-year-olds graduate from high school, sign up for credit cards without understanding them, and get trapped in the debt cycle. Before you can invest, you need to understand personal finance enough to control your spending, avoid toxic debt, and save money. If basic financial literacy was taught in high school, the situation may improve.

This group has probably done more to encourage evidence-based investing than any other.

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Re: Why do so many Americans not own stocks?

Post by DaleMaley » Tue May 08, 2018 7:03 am

The phenomena that most of the wealth in a society is owned very a relatively small percentage of the people is nothing new.

Mr. Pareto discovered around 1906 that 80% of the land in Italy was owned by only 20% of the people. When he looked at other countries, he found the same type of relationship. This led to the famous Pareto 80:20 Rule that is used everywhere in business to determine which factors are the crucial ones to improve on. In the US today, it is closer to 90:10 versus 80:20 in terms of what percent of people own the wealth.

from Wikipedia..........

Vilfredo Pareto

Born 15 July 1848
Paris, France
Died 19 August 1923 (aged 75)

Contributions Pareto index
Pareto chart
Pareto's law
Pareto efficiency
Pareto distribution

Vilfredo Federico Damaso Pareto (Italian: [vilˈfreːdo paˈreːto]; born Wilfried Fritz Pareto, 15 July 1848 – 19 August 1923) was an Italian engineer, sociologist, economist, political scientist, and philosopher, now also known for the 80/20 rule, named after him as the Pareto principle. He made several important contributions to economics, particularly in the study of income distribution and in the analysis of individuals' choices. He was also responsible for popularising the use of the term "elite" in social analysis.

He introduced the concept of Pareto efficiency and helped develop the field of microeconomics. He was also the first to discover that income follows a Pareto distribution, which is a power law probability distribution. The Pareto principle was named after him, and it was built on observations of his such as that 80% of the land in Italy was owned by about 20% of the population. He also contributed to the fields of sociology and mathematics, according to the mathematician Benoit Mandelbrot and Richard L. Hudson.
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. – Warren Buffett

JoeRetire
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Re: Why do so many Americans not own stocks?

Post by JoeRetire » Tue May 08, 2018 7:08 am

xcdq wrote:
Tue May 08, 2018 2:16 am
The fact is, the richest people own businesses, or are part-owners. That should give people a clue to buy stocks in companies.
The latter doesn't necessarily follow from the former. Owning your own business and owning stock in someone else's business aren't the same thing. (Not to mention that lots of people own small businesses and make just enough to live on. Not all business owners are rich.)
Why don't more people buy stocks, and have the dividends automatically reinvested, in order to build wealth?
Not everyone has disposable income. Many folks live paycheck to paycheck.
You are not going to get anywhere working.
You get to the point where you can pay your bills and still have enough left over to invest for the future. That's "somewhere" in my book.
Why do so many Americans not own stocks? Why do so many Americans just work everyday, complain about lack of money and never buy a stock?
Maybe you just don't know all that many Americans?

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Cycle
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Re: Why do so many Americans not own stocks?

Post by Cycle » Tue May 08, 2018 7:16 am

jharkin wrote:
Tue May 08, 2018 6:16 am
So their Corolla actually costs them more than your Lexus.
And they buy the car anyway. The house next door to us is owned by the city and is low income subsidized housing, which means they pay rent but below market (probably $1000 instead of $1600). They have four cars.

At the very least a car will cost $4k per year. Cars are one burden that suppresses savings of the poor. Some choose to live in a location that requires a car to get to work (or that's all they can find with the subsidized housing) and then a good chunk of their take-home pay goes to funding transportation to work.

Meanwhile we have one car despite having jobs 14 and 18 miles from home, which allows us to save $178k per year instead of $173k.

Shamb3
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Re: Why do so many Americans not own stocks?

Post by Shamb3 » Tue May 08, 2018 7:20 am

They live beyond their means instead of below it.
Live in a part of the country that is too expensive for the income their skills demand.
Spent too much on a house.
Spent too much on cars.
Have kids even though they are scrapping by.

etc, etc, etc

BogleMelon
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Re: Why do so many Americans not own stocks?

Post by BogleMelon » Tue May 08, 2018 7:40 am

Not just this, but I know at least 2 families who sold their retirement account to buy a home in a HCOL area with a 3% down payment.
I think people just tend to understand and appreciate tangible assets because they can "see" it! :oops:
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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Re: Why do so many Americans not own stocks?

Post by gmaynardkrebs » Tue May 08, 2018 7:42 am

xcdq wrote:
Tue May 08, 2018 2:16 am
I don't understand it.

People complain about not having enough money. The fact is, the richest people own businesses, or are part-owners. That should give people a clue to buy stocks in companies. People can save up some money from their employment, in order to buy stocks.

Why don't more people buy stocks, and have the dividends automatically reinvested, in order to build wealth?

I've come to the conclusion that... owning stocks is one of the most important things in life. If you want to build wealth, you should own stocks. You are not going to get anywhere working. You are just going to work everyday, complain about not having enough money, and that's it.

Owning a business, or owning a lot of stocks, is how you make the most money. A lot of stocks are not much money at all to buy, so there's really no reason not to buy them.

Why do so many Americans not own stocks? Why do so many Americans just work everyday, complain about lack of money and never buy a stock?
I agree with the post above re buying a house as the first priority. It certainly was for me. As far as returns on what you invested, you did extremely well due to the leverage. It was also quite safe, and until 2008, few people lost money. Today, stocks may be better, but I'm not sure about that either.

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Re: Why do so many Americans not own stocks?

Post by randomguy » Tue May 08, 2018 7:49 am

BogleMelon wrote:
Tue May 08, 2018 7:40 am
Not just this, but I know at least 2 families who sold their retirement account to buy a home in a HCOL area with a 3% down payment.
I think people just tend to understand and appreciate tangible assets because they can "see" it! :oops:
I know a half dozen families that did the same (well bigger downpayment). They all made a much better investment choice than I did by keeping my money in a 401(k). 7%+ returns leveraged 5x+ results in a lot more money than investing and making 7-12% with no leverage. And it isn't even remotely close. Their 100k on a 1 million dollar house was bringing them in 70k/year of gains while my 100k in the 401(k) was lucky to make 10k. And that is before factoring in that my housing costs double while theirs barely moved. Obviously the risk between the 2 holding wasn't close either and there expenses started off higher (by about 30%) before dropping to well below mine.

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Re: Why do so many Americans not own stocks?

Post by bradshaw1965 » Tue May 08, 2018 8:05 am

TwstdSista wrote:
Tue May 08, 2018 4:37 am
Some people simply can't. Imagine living on minimum wage, or even $15/hour. Even a two earner couple. Then add kids, childcare, etc.
Dual earner couple working full-time at $15 an hour is $60k, within earshot of the median household income. Dual earner couples with kids median is higher but the imagination isn't really taxed with that scenario.

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Re: Why do so many Americans not own stocks?

Post by leonidas » Tue May 08, 2018 8:07 am

Many people deem the financial markets as too risky or even a scam. My parents preferred the certain return of 5,6 or 7% they were getting from banks to the possibility of any loss in the markets. I remember once in '96 when the market was selling off my mother called me in a panic to sell everything. Same thing in 2000 and 2008. Also in '94 she was terrified of buy a 2 year treasury yielding 7.75 since she didn't get a statement with interest credited every month so she wasn't sure where her money was. Now she laments that they didn't make any investments as their savings has pretty much evaporated with <1% interest rates.

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Re: Why do so many Americans not own stocks?

Post by BogleMelon » Tue May 08, 2018 8:12 am

randomguy wrote:
Tue May 08, 2018 7:49 am
BogleMelon wrote:
Tue May 08, 2018 7:40 am
Not just this, but I know at least 2 families who sold their retirement account to buy a home in a HCOL area with a 3% down payment.
I think people just tend to understand and appreciate tangible assets because they can "see" it! :oops:
I know a half dozen families that did the same (well bigger downpayment). They all made a much better investment choice than I did by keeping my money in a 401(k). 7%+ returns leveraged 5x+ results in a lot more money than investing and making 7-12% with no leverage. And it isn't even remotely close. Their 100k on a 1 million dollar house was bringing them in 70k/year of gains while my 100k in the 401(k) was lucky to make 10k. And that is before factoring in that my housing costs double while theirs barely moved. Obviously the risk between the 2 holding wasn't close either and there expenses started off higher (by about 30%) before dropping to well below mine.
Are you talking about a house that they rent out? Was the $70K net or gross?

Anyways, in my case, the people I talk about is buying houses with 3% down to live just live in! Oh and i didn't mention that once they moved in they stopped their retirement contributions completely because they had consumer debts (new furniture, home fixtures..etc) to pay off..

Rental houses can be huge successful business of course.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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Re: Why do so many Americans not own stocks?

Post by jharkin » Tue May 08, 2018 8:27 am

BogleMelon wrote:
Tue May 08, 2018 8:12 am
randomguy wrote:
Tue May 08, 2018 7:49 am
BogleMelon wrote:
Tue May 08, 2018 7:40 am
Not just this, but I know at least 2 families who sold their retirement account to buy a home in a HCOL area with a 3% down payment.
I think people just tend to understand and appreciate tangible assets because they can "see" it! :oops:
I know a half dozen families that did the same (well bigger downpayment). They all made a much better investment choice than I did by keeping my money in a 401(k). 7%+ returns leveraged 5x+ results in a lot more money than investing and making 7-12% with no leverage. And it isn't even remotely close. Their 100k on a 1 million dollar house was bringing them in 70k/year of gains while my 100k in the 401(k) was lucky to make 10k. And that is before factoring in that my housing costs double while theirs barely moved. Obviously the risk between the 2 holding wasn't close either and there expenses started off higher (by about 30%) before dropping to well below mine.
Are you talking about a house that they rent out? Was the $70K net or gross?

Anyways, in my case, the people I talk about is buying houses with 3% down to live just live in! Oh and i didn't mention that once they moved in they stopped their retirement contributions completely because they had consumer debts (new furniture, home fixtures..etc) to pay off..

Rental houses can be huge successful business of course.

Randomguy, are you sure about the math on that million dollar house?


I bought my place in 09, near the bottom and for at least 100k cheaper than it was listed at in 07. According to Zillow its appreciated about 20% total in 9 years (nowhere near the 7% annualized you are seeing) and that's before even factoring in the payments on my 3.5% mortgage or all the money Ive poured into renovations. Overall I bet I have barely broken even. And this is in the HCOL Boston suburbs.

In the same timeframe my 401k/IRA balances have more than tripled.

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Re: Why do so many Americans not own stocks?

Post by bgf » Tue May 08, 2018 8:47 am

investing in stocks is just allocating a portion of one's wealth/net worth to a specific asset, stocks. to do this, you must first have wealth. most americans have little, if any, net worth, and those who do have a positive net worth have most of it in their home + vehicles.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

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Re: Why do so many Americans not own stocks?

Post by EnjoyIt » Tue May 08, 2018 8:49 am

You only live once mentality.
The entightement mentality of deserved happiness now regardless of future concerns.
Social media glamorizing frivolous consumption.
Lack of understanding how to build wealth.

Glockenspiel
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Re: Why do so many Americans not own stocks?

Post by Glockenspiel » Tue May 08, 2018 8:49 am

1) Income Inequality - the rich get richer while the poor and middle-class America stays the same. Income inequality has been exacerbated greatly in the last 40 years and will only continue to get worse.

2) The majority of poor and middle class people can't afford an unexpected $500 car repair. How in the world do you expect them to save to buy stocks?

3) Institutionally, systems in America punish poor people and reward rich people - credit scores, payday loans, late fees, overdraft fees, loan rates, traffic fines, bail, etc, etc. If you were just trying to make enough money to pay rent, utilities, put gas in the car to get to work, and buy food for the month, and you end up needing a $300 repair on your car, you take out a payday loan with a 50% interest rate (because you can't qualify for a credit card due to low credit score), and then the next month you truly can't afford to pay for rent, utilities, gas, and food, and the snowball effect continues.

4) Low-wage jobs offer very few benefits - health insurance premiums are more, no 401k or 401k match, no short-term disability insurance, no long-term disability insurance, reduced part-time hours, etc.

5) People (taxpayers) complain that people have babies before they are financially ready, yet are unwilling to value women's health and education as valuable, in this country, to reduce unwanted pregnancies.

6) A large percentage of people aren't educated well enough to be able to understand HOW to go about investing in stocks. Where do I sign up? Edward Jones down the street? How do I pick a stock? What is a mutual fund? Oh, you're only going to charge me 2% in fees? Oh, I can buy this whole life insurance policy that will only gain in value with no risk? Sure, sign me up! Sounds better than stocks!
Last edited by Glockenspiel on Tue May 08, 2018 8:54 am, edited 2 times in total.

Angst
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Re: Why do so many Americans not own stocks?

Post by Angst » Tue May 08, 2018 8:52 am

xcdq wrote:
Tue May 08, 2018 2:16 am
I don't understand it.

People complain about not having enough money. The fact is, the richest people own businesses, or are part-owners. That should give people a clue to buy stocks in companies. People can save up some money from their employment, in order to buy stocks.

Why don't more people buy stocks, and have the dividends automatically reinvested, in order to build wealth?

[Snip]... You are just going to work everyday, complain about not having enough money, and that's it.

[Snip]...

Why do so many Americans not own stocks? Why do so many Americans just work everyday, complain about lack of money and never buy a stock?

To the OP: Why don't YOU invest in stocks?
Two days ago, in another thread you said... (my emphasis)

xcdq wrote:
Sun May 06, 2018 5:52 pm
I am thinking about buying stocks, and I was wondering if a DRIP plan is good. I've never bought stocks before.

The stocks I'm thinking about buying would be from big companies, like Coca-Cola, Starbucks, ExxonMobil, etc.

You've posted a grand total of 3 times now at our website, 2 of which were new threads you started and have yet to respond to any of the replies, but you apparently have no trouble criticizing (to paraphrase you) "all those complaining Americans who never buy stock".

Forgive me, but that kinda appears to describe you! So please post your first response sometime soon and let us know: Why haven't you invested in stocks?

If the OP won't participate in a thread like this, it ought to be locked.

rudeboy
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Re: Why do so many Americans not own stocks?

Post by rudeboy » Tue May 08, 2018 8:55 am

I have a few friends in America who do not own stocks and are not saving for retirement due to a belief that socialism or some other change will save them.

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Toons
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Re: Why do so many Americans not own stocks?

Post by Toons » Tue May 08, 2018 8:58 am

They don't Save enough to invest.
Forget about delayed gratification.
They want something tangible .
Stuff.
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Glockenspiel
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Re: Why do so many Americans not own stocks?

Post by Glockenspiel » Tue May 08, 2018 9:03 am

rudeboy wrote:
Tue May 08, 2018 8:55 am
I have a few friends in America who do not own stocks and are not saving for retirement due to a belief that socialism or some other change will save them.
I find this hard to believe. Maybe I surround myself in the wrong circles, but I live in a liberal part of my state, and there's nobody around here that thinks "socialism will save them".

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Re: Why do so many Americans not own stocks?

Post by MrPotatoHead » Tue May 08, 2018 9:04 am

01) The motivation factor is very, very low due to the various social safety net programs and there is almost no social stigma attached to taking government of charitable handouts. You can see this behavior manifest itself even among Bogleheads or FIRE types in regard to the ACA. In essence why save or provide for yourself when you can use the power of the voting both to take from those that have?

02) In the U.S. many people are taught by society and even their parents to disparage those who have money. I know my family had a very negative view of anyone who had accumulated something. When my mother said "you're rich" it was meant disparagingly.

03) Financial Independence is not taught, either socially or formally.

04) People do not understand how good we have it compared to the bulk of previous generations in terms of ready access to investments at low cost through neat and orderly markets. Rather than see this as blessing and tool to be leveraged to one's own advantage many still see it as an attribute of the class of people who they imagine to oppress them.

05) Some percentage may genuinely be income challenged, once you account for the cost of basic necessities.

06) It is a spendthrift culture.
Last edited by MrPotatoHead on Tue May 08, 2018 9:10 am, edited 2 times in total.

MinhN
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Re: Why do so many Americans not own stocks?

Post by MinhN » Tue May 08, 2018 9:06 am

I don't agree with the conclusion. It's easy to blame the victim but the average American is not doing well these days because of bad longstanding economic policies, which hinder many Americans from saving or investing their money.

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KlingKlang
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Re: Why do so many Americans not own stocks?

Post by KlingKlang » Tue May 08, 2018 9:09 am

leonidas wrote:
Tue May 08, 2018 8:07 am
Many people deem the financial markets as too risky or even a scam. My parents preferred the certain return of 5,6 or 7% they were getting from banks to the possibility of any loss in the markets. I remember once in '96 when the market was selling off my mother called me in a panic to sell everything. Same thing in 2000 and 2008. Also in '94 she was terrified of buy a 2 year treasury yielding 7.75 since she didn't get a statement with interest credited every month so she wasn't sure where her money was. Now she laments that they didn't make any investments as their savings has pretty much evaporated with <1% interest rates.
This describes everyone in my family perfectly. The only acceptable investments are from a bank where your friends from church work and US Savings Bonds, and of course banks no longer sell savings bonds. To top it off my grandmother once put a small amount of money into a private stock offering from the single branch bank where her friends from church worked and lost it when the bank closed. (The only thing that she understood about it was that it was from the bank and they served free coffee and sandwiches at the shareholder meetings.) She asked her priest what to do and was told that "Stocks are sinful, they're a millstone around your neck!", and we had to hear that every time we saw her until the day she died.

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Re: Why do so many Americans not own stocks?

Post by nyclon » Tue May 08, 2018 9:16 am

1. As stated above most americans are not in a position to save.
2. If they are, human instinct kicks and as a result folks are greedy for the short term; e.g. YOLO

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Re: Why do so many Americans not own stocks?

Post by MrPotatoHead » Tue May 08, 2018 9:17 am

GratefulinNC wrote:
Tue May 08, 2018 5:11 am
If you want outsized wealth, insert yourself into the commission stream.
+1

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Re: Why do so many Americans not own stocks?

Post by prudent » Tue May 08, 2018 9:20 am

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