If you’re new to the investing game, you’ll be pleased to hear that over the last decade the stock market has gotten stronger and stronger. However, hardly anyone seems to know about it! Why does everyone think the stock market is on a downhill slide?
The ‘credit crunch.’
The 2008 financial crisis seemed to put people off investing in stocks and shares. Fast forward a decade, and all evidence suggests the economy has come on leaps and bounds. Yet, the stigma surrounding stock investments hasn’t changed.
The fact the stock market is boasting record-breaking highs without an increase in investments goes to show that stocks are no longer a priority of investors.
Investors don’t warm to stocks
Like we’ve already said, there’s a general distrust surrounding the stock market, and recent stats back up this up. In fact, as many as 66% of investors admit that since 2008 they’ve invested less.
ccording to Mutual fund data, over the last ten years investors have withdrawn as much as $800 billion from stock mutual funds; that’s an insane amount of money!
What are people investing in instead?
In short, more and more investors are buying bonds rather than stocks. Although this provides a lower yield, it’s generally lower risk.
The only problem is if your investment portfolio for your retirement fund purely comprises of bonds (and no stocks), your return will grow slower than the rate of inflation. Over time this will wittle down your savings which makes it harder to put money aside for your retirement.
This begs the question, how do you start investing in stock? To which we answer: carefully. Start with a broad index fund. This should target a large sector of the American market to help distribute the risk. The benefit is that the fees are usually pretty low and you get some degree of protection.