Investophobia: Why Half of Americans Shun the Stock Market

Investophobia: Why Half of Americans Shun the Stock Market

When it comes to investing, it seems Americans would rather be passive observers than active participators.

That's at least according to a recent Bankrate.com survey, which found that more than half of Americans opt out of investing in the stock market—even in their 401(k)s and IRAs.

The problem? With the market's run over the past year or so reaching record highs, the bystanders are missing out on an opportunity to build wealth. So what gives?

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With the memory of one of the worst recessions of our time still fresh in our minds, it may not come off as surprising that people would be hesitant to invest—especially considering U.S. households lost trillions in wealth during the worst of the recession.

But risk aversion ranked low on the list of reasons people chose to stay out of the markets—only 7% cited it as their motivation. The number one reason? People simply don't have the dollars to devote to investing: Among those who don't invest, 53% say they can't spare the money for it.

In addition to feeling strapped for cash, another 21% of investing abstainers say it’s because they lack investing know-how. And it's young people who feel the least educated—Millennials were twice as likely as those in other age groups to say they didn't invest because they didn't know enough.

But with time on their side, the younger generations may be missing out on a huge opportunity in compound growth, Claes Bell, analyst for Bankrate.com, told USA Today.

"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," he said. "That's a huge opportunity for people to build wealth and security for their retirement over the long term."

Are you ready to take the bull (market) by the horns? Read this investing guide to see if you should take the plunge.

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