Americans Staying on the Sideline

The stock market might have rebounded since the financial crisis, but according to the latest COUNTRY Financial Security Index survey, many Americans are still wary of investing or simply are unable to get started. Just over half of Americans (51 percent) say they do not invest in the stock or bond markets in any way.

For those who do not invest, 56 percent say not having enough money is the biggest obstacle. Americans also cite distrust of the stock and bond markets (12 percent) and not knowing how to get started (11 percent) as prominent barriers.

Of the 45 percent who invest, they’re focused on the future and are diligent about regularly checking their investments.

• An overwhelming majority (88 percent) invest to improve their long-term savings.
• Seventy-eight percent review their portfolios at least quarterly.

Regardless of whether or not they invest, Americans are struggling to keep pace with the speed of the market. Half say they find it difficult to keep up with the volatility of the stock market.

“Investing is a key component of any financial plan, and while half of people say they’re not invested, they might still be unknowingly benefiting from market upswings through an automatic 401(k) enrollment at work, for example,” says Troy Frerichs, director of wealth management at COUNTRY Financial. “Investing may seem daunting at first, but the key takeaway is any level of involvement is a good starting point.”

Do Americans have trust issues?

Perhaps as a result of the economic downturn, levels of trust in the stock and bond markets, and who Americans consult for investment advice vary noticeably across generations:

• Those who are age 50 and older expressed higher levels of unease, with one in five Baby Boomers (21 percent) citing distrust in the stock and bond markets as their biggest reason for not investing.
• For those who invest, 42 percent say a financial planner is their most trusted decision-maker. Americans over 65 are significantly more likely to trust a financial planner, with 61 percent of them citing a planner as their primary resource for investment advice.
• However, those under age 30 are more likely to consult internet research (27 percent) than a financial planner (22 percent) when it comes to making investment decisions.

With Americans turning to financial planners and online research, an overwhelming majority (87 percent) say they’re rarely or never consulted by friends or family about their investment decisions.

“With a market that’s more complex and faster-moving than ever, having a resource you trust for advice, whether it’s a financial planner or online research, is essential,” adds Frerichs. “Investing helps you build financial stability and achieve your financial goals. Your investment strategy should be tailored to your unique needs. Reviewing it annually and after major life events can help keep you on track.”

Since 2007, the COUNTRY Financial Security Index has measured Americans’ sentiments of their personal financial security. The COUNTRY Index also delves deeper into individual personal finance topics to better inform Americans about the issues impacting their finances. Survey data, videos and analysis are available at www.countryfinancialsecurityblog.com and on Twitter at @FinanceSecure.

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By Ayo Mseka
Editor-In-Chief