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Americans hesitate to buy stock, seek out other investments

By Mary Richards | Posted - May 13th, 2013 @ 8:35am



SALT LAKE CITY — Despite the stock market's new highs, stock ownership among Americans is at its lowest since 1998.

A recent Gallup poll found just 52 percent of Americans said they or their spouses are invested in the stock market. That number has been on the decline since 2007 when it peaked at 65 percent.

People may be hesitant to invest in the stock market and seek out other options, like CDs and savings accounts. A study by Bankrate.com shows 76 percent prefer savings accounts or CDs to stock investments, but James Derrick, financial chief investment officer at Smedley Financial, said consumers get better returns from stocks.

"It can make a real difference over time, especially if you can get that compounded growth in the market," Derrick said.

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Despite Americans' low confidence in investing, Bankrate.com said consumers reported feeling more confident in finances than they did last year, but not by much. Only 27 percent reported feeling better about their overall financial situation today, while 48 percent say they feel about the same.

Derrick said emotions still run high because of the financial crisis, and those emotions lead people to do the opposite of what they should do. The pain of losing is much greater than the thrill of winning, Derrick said.

"Those losses are really going to hurt," he said. "Even though the market goes up over the long run, we are so affected by these losses (that) we have a hard time keeping a long-term perspective."

While the majority of Americans prefer savings accounts and CDs, they're more short term than stock investments because of lower interest rates, Derrick said. With stock investments, the long-term benefits are compounded interest rates.

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