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Americans Prefer This Investment Opposed To Stocks

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Americans Prefer This Investment Opposed To Stocks

A recent report has revealed that people would rather invest their money over the long term in real estate and cash over other investment types, including stocks.  

Loss of confidence in stocks

A survey that Bank Rate recently conducted has revealed some concerning results.

The report asked people where they would invest their money that they do not need for ten years or more.

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The results show that 25% of Americans would spend their money in real estate, and 23% would invest their money in cash.

This is concerning because capital investments are safe for short-term investments but have yield low returns when invested for extended periods of time.

Real estate is a good long-term investment, however; it is the older generation who are investing in real estate.

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People ages 18-25 are keeping their money in cash.

The stock markets may have been facing a period of extreme volatility recently; however, investors have still managed to achieve plenty of positive returns.

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The lack of confidence in the stock markets as a viable investment choice could be detrimental to the market’s ability to achieve their long-term goals.

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Why are stocks necessary?

Movements in the equity markets can have a significant effect on the economy.

A crash in the markets can trigger a recession, although this is not always the case.

The stock market affects the economy in the following ways:

  • Individual wealth
  • pension funds
  • investor confidence
  • ability to gain finance
  • bond yields

The state of the stock market can significantly influence the confidence in not only businesses, but also consumers.

However, this relationship also works the other way round.

During bull markets, firms and consumers feel confident spending money, and this boosts the markets.

Consequently, during a bear market (or the threat of one) businesses and consumers are more likely to be careful with their money.

Currently, the markets are doing well, so why are Americans not investing in them?

Why are people avoiding the stock market?

The current bull market has been going strong since 2009, and yet there continues to be little confidence in the stock exchange.

One potential reason for this could be the effect the dot-com bubble had on investor’s finances in 2000, followed by the financial crash in 2008.

Other possible reasons people do not invest in the stock market include:

  • They believe they cannot afford to
  • they wouldn’t know where to begin
  • distrust in the stock market

What should you consider before you invest?

You should not start to invest in stocks without first learning as much as you can about the stock market.

As well as learning about the markets, you should also determine your financial situation.

You will need to take careful consideration to ensuring you have enough to cover any debt as well as an emergency fund to assist in unforeseen circumstances such as job losses.

It is also helpful if you plan your investments.

You should consider why you are investing.

If you have a goal, then you are more likely to remain focus and succeed.

Conclusion

A recent study revealed that Americans are more likely to invest their money long term in real estate or cash.

Investing in real estate is a sensible long-term investment; however investing in cash is usually only suitable for short-term investments due to low return yields.

Despite the stock market recently showing incredible resilience despite the markets being volatile, Americans continue to have little confidence in the equity markets.

The economies linked to the economy and a stock market crash has the potential to trigger a recession.

Bull markets spark confidence in businesses and consumers while bear markets cause consumers and businesses to be more frugal.

We are currently in a bull market and have been since 2009.

There are many reasons that Americans may be avoiding the stock markets; these include being deterred from past stock market crashes, inability to afford to invest, unsure where to start, distrust of the stock exchange.

Anyone who is considering investing in the stock market should learn about how it works.

It is also important to look at your finances, paying close attention to any debts and ensuring you have provisions saved in the case of any emergencies that may occur.

Finally, it would be helpful if you draw up a plan that details what you are hoping to achieve by investing in the stock market.

A program will not only help you to remain in focus, but it will also help you to succeed.

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