Where today's Americans are investing their money

People stand outside of the New York Stock Exchange is viewed on April 9, 2012 in New York City. According to the latest Gallup polls, fewer people are investing in the stock market these days than ever.

Kai Ryssdal: As of this moment, the three major stock indices are -- if not at record highs -- then certainly at levels you might not expect given the soft-ish economy. But what American think about the markets and where to put their money? Well, that's a whole 'nother ballgame.

Frank Newport is the editor-in-chief of Gallup. He's with us every week for an Attitude Check, our partnership exploring what Americans think about the news of the day. Or in this case, where the Dow closed. Frank, it's good to talk to you again.

Frank Newport: Good to be with you, Kai.

Ryssdal: So where do Americans like to put their money here in the spring of 2012?

Newport: Well, gold. Yeah, we gave them five choices -- actually we have a longer-term trend that we did not include gold in. We said: Where should you put your money -- real estate, stocks, savings accounts or bonds? And that's rather mixed. But we also threw gold into the mix last year and this year, and gold actually wins. Not by a huge margin, mind you, but 28 percent of Americans say gold is the best place for my money right now, best long-term investment. Real estate's down at 20; stocks one point below that at 19; and then under the mattress, savings accounts is also at 19. So gold wins out.

Ryssdal: OK, here's why that's troubling: You always hear people on, gee I don't know, business and economic programs, when they offer the price of gold, they always say it's the traditional safe haven when things are going absolutely down the toilet.

Newport: Well people are not rational. Let me give an example. (How's that for an insight?) When it comes to investments, obviously you should buy more stocks when stocks are down, but we found for example in 2009, when the market was way down, only 15 percent of Americans said stocks were the best investment. That was the low point -- actually that's when they should have been sinking money into stocks and so on. So people are not as shrewd investors probably as you or your listeners are at this point. So they're kind of reacting to the idea that right now with all the turmoil -- maybe because of the television commercials -- gold sounds like a safe haven.

Ryssdal: But let me ask you this, though: Is it true that Americans are not in the stock market like they used to be?

Newport: That is true. This goes all the way back to 1998. It's a simple question which says: Do you, or jointly with a spouse, have any money in the market through an individual stock or a mutual fund or a 401(k) or an IRA? It was 60 percent back in 1998 who said yes to that question; these are 18-plus adults. It reached a high of 67 percent in 2002, and it's drifted around since then. But this year, when we asked it, it's only 53 percent -- just a little more than half of Americans are now in the market, and that is the lowest that we have ever measured going all the way back to 1998.

Ryssdal: Do you ask the why question?

Newport: We don't ask why, although obviously from what we've been talking about, it's because they think they should be in gold. Age is a huge factor here. Young people just don't have money in the market, which you say, all right, they don't have the money to invest yet. But when we say: What's the best investment? Young people totally don't mention stocks, particularly those under 30. They say real estate or savings accounts. So psychologically, the younger American today simply isn't attuned to stocks. It doesn't look like to us as a positive place to put money.

Ryssdal: Wow. I want to back you up and end on this note: Did I hear you say that 19 percent of Americans think sticking it under your mattress is the best place to put your money?

Newport: Well, I broadened that. The actual category that we used was 'savings accounts or CDs.' But given that those are paying zero percent interest now, I assumed that was the same thing as putting money under the mattress.

Ryssdal: Fair enough. Frank Newport, he's the editor-in-chief at Gallup. The partnership we do with them every week is called Attitude Check. Frank, thanks a lot.

Newport: You bet.

About the author

Frank Newport, Ph.D., is the editor-in-chief at Gallup and appears regularly on Marketplace.
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Dwayne73 is exactly right, people aren't stupid and know that the only people making money on the market are brokers and insiders. The gutting of the SEC, Justice and other enforcement agencies is going to come back an haunt this country in the most severe way. We think we are "letting the markets work", but all we are doing is stealing from the working class to give the wealthy. Some day soon, hopefully sooner rather than later, the citizens will wake up and see that Wall Street is robbing this country blind and send the POLICE back in there because Wall Street brokerages are nothing but thieves.

I think there are many reasons for people NOT to get into the markets. It is gambling plain and simple. It is also very hard to get sound honest advice without somebody selling you something you don't want or hitting you with fees. People just don't trust banks. Another thing is that the markets are broken. Ecomonist and brokers keep quoting history but no body can predict the future. The sound investment advice did not hold water in the last decade. As far as modern investing in 401Ks, market bubbles have killed me. I am well deversified but the end result is that I seem to be buying high every week with my automatic deductions and then the market crashes and I look at my fund's value and wonder if I'll have any money to retire with. Long term investing for me has been 35 years and I am no where close in getting a 6-8% return over the life of my 401K. Unless the Fed raises interest rates soon, I might as well put the money under my matress, at least it will not be lost to bankruptcies or broker fees and will not be subject to income taxes.

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