The reasons only half of Americans invest in stocks

A recently published BankRate.com survey discovered roughly half of all working Americans and 75 percent of millennials do not own any stock or 401(k) plans.

“For adults under 30, only 26 percent of whom said they own stock, the consequences could be profound,” wrote BankRate. “Young people who don’t invest in equities early are set to have ‘a lot less money later on,’ says John Salter, associate professor of financial planning at Texas Tech University.”

The important question is, why are Americans generally and young Americans specifically not investing their money?

“A lack of funds is the biggest thing hampering young people’s willingness to invest,” reported MarketWatch. “According to 42 percent of survey respondents under 30, the main reason they’re not investing in the stock market is because they don’t have enough money. This group has been plagued by unemployment and underemployment in the wake of the Great Recession. That’s been compounded by staggering levels of student debt, making it difficult for young people to establish a steady income that leaves room for saving.”

The lack of funds is followed by a lack of know-how regarding the investing process.

“They just don’t know a lot about it,” wrote MarketWatch reporter Jillian Berman. “They’re just coming out of college or out of high school. There aren’t very many formal opportunities to learn about this stuff.”

The third largest reason why people choose not to invest is they do not trust Wall Street.

“So you’d expect to see more people with some money in the stock market,” Claes Bell, banking analyst for Bankrate.com, told USA Today. “But we had two big market shocks in recent memory. The bubble burst in tech stocks around 2000, and of course the financial crisis. So part of that probably comes from mistrust of the markets and … people not having the funds to invest right now.”

This lack of investment is particularly troubling when one considers that a diversified, long-term stock portfolio makes for one of the most effective investment strategies to prepare for retirement in the future.”I think the vast majority of people should have stocks as part of a mix of investments,” Bell said. “Over the last five years, if you invested in a broad market index of U.S. stocks, you have basically doubled your money between dividends and rising stock prices. That’s a huge opportunity for people to build wealth and security for their retirement over the long term.”