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More Americans investing in stock

While the market rises in popularity, the value of holdings is relatively low.

By HELEN HUNTLEY, Times Staff Writer

© St. Petersburg Times
published September 27, 2002


No wonder the bear market has been so painful. More Americans than ever have a stake in the stock market's performance.

A record 49.5 percent of all U.S. households own individual stocks or stock mutual funds, according to a survey being released today by the Investment Company Institute and the Securities Industry Association. That's up from 48.2 percent three years ago when a similar survey was conducted.

The number of households owning shares rose from 49.2-million to 52.7-million.

Saving for retirement is their primary financial goal.

But stocks have not made average Americans wealthy. Half the shareholders surveyed said their equity investments were worth $50,000 or less and only 3 percent acknowledged being stock market millionaires -- unchanged from three years ago.

Most likely those portfolios have fallen along with the stock market since the survey was conducted in January. That was after Enron filed for bankruptcy, but before WorldCom, Tyco and other scandals rocked the market.

The typical U.S. equity investor is a married baby boomer, age 47, with a household income of $62,500. Portfolio size increases with age. The average stock investor born since 1964 has $25,000 in equities, representing nearly three-fourths of the household's total financial assets. For those born before 1946, the average stock portfolio is $69,600, but it represents only a fifth of the household's financial assets.

Most stock investors -- 89 percent -- own stock mutual funds, while 49 percent say they own individual stocks. Thirty-eight percent own both. Household mutual fund ownership has risen 12 percent over the past three years while ownership of individual stocks has declined 5 percent.

The fastest-growing category of equity ownership is stock funds held inside employer-sponsored retirement plans, up 17 percent. Seventy-nine percent of all stock investors own stock through employer plans, primarily mutual funds. That's the most common way they got started investing in equities.

"One key point that emerges from our survey is the important role that employer-sponsored retirement plans play in introducing Americans to investing," said Marc E. Lackritz, president of the Securities Industry Association.

Most married couples -- 57 percent -- said they share the investment decisionmaking. About the same percentage said they rely on financial advisers for advice.

About a third use the Internet to execute some transactions.

-- Helen Huntley can be reached at huntley@sptimes.com or (727) 893-8230.

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