The S&P 500 has more than doubled since 2009. So why are Americans still so stock-market shy?
A new Bankrate.com survey finds that almost three-quarters (73%) of the country remains wary of investing, with survey respondents indicating that they’d rather play it safe in liquid accounts than take a chance in the market.
Although the most-recent financial crisis may be five years in the past, it’s likely still fresh in the nation’s memory. “A lot of individual investors got burned twice [in the last decade] and as a result they swore off investing,” Greg McBride, chief financial analyst at Bankrate.com, told CNN Money, referring to the dot-com bubble of 2000 and the Great Recession of 2008.
As a result, many Americans now prefer to pay it safe, opting to sock away money in low-risk bonds, low-interest CDs and savings accounts. Unfortunately, the strategy is unlikely to keep long-term savers on track for retirement. Investing typically offers much higher returns over the long run, and also helps to beat inflation. ”Individual investors are jeopardizing their long-term financial stability over concerns about short-term volatility,” McBride said.
Sure, the stock market can sometimes seem like a roller coaster—but if you’re focused on saving for something far in the future (like retirement), investing in a diversified, well-balanced portfolio is often the best way to build wealth over time.