The Federal Reserve has taken dramatic steps in recent years to stabilize banks and force investors into riskier assets. This so-called “wealth effect” is an idea that a sustainable economic recovery will form as higher asset prices cause more people to feel confident and spend money. The strategy has worked to some degree in the short-term, but nearly three in four Americans are still cautious on the stock market.
Despite a five-year bull market and record low interest rates, 73 percent of Americans across all age groups and income levels say they are not more inclined to invest in stocks, according to a new survey from Bankrate. That figure is relatively unchanged from 76 percent in April 2012 and April 2013. Only 22 percent say they are more inclined to invest in stocks. In fact, just 34 percent of those with salaries of at least $75,000 say they were more inclined to invest in stocks these days.
“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’s chief financial analyst, in a press release. “An overly conservative investment stance compounds the problem that so many Americans have of not saving enough for longer-range goals like retirement.”