Not Just for the Rich

The idea that the market is a haven for the wealthy is not supported by what we've just learned about the obstacles that novice investors may encounter when they try to invest. 53% of all American families had investments in the stock market as of 2019. It was just a modest 32% thirty years ago, with a large portion of the difference undoubtedly attributable to the ease of stock trading on the internet.

Even if it's also true that the wealthiest 10% of families own 70% of the stock, many people in the middle classes still have sizable holdings. For instance, the median household savings in stocks is roughly $40,000 (i.e., the most typical amount, not the potentially very deceptive average). About a fifth of Americans, even those in the bottom 25%, have stock market investments.

The 53% of households that own shares have a strong but not overwhelmingly Caucasian bias. About 61% of homes have them, compared to 34% of African American households and 24% of Hispanic households. In a similar vein, 43% of the shares are owned by shareholders 65 and older. But across demographics, just a small portion of people directly purchase shares at a brokerage. 15% is about right. Retirement accounts are used for the remaining amounts.