Most Americans remain wary of investing in the stock market, even though the Wall Street indexes are near a four-year high and interest rates on savings accounts are near zero, according to a new study released Monday by the firm Bankrate.com.
As the stock market climbs near post-recession peaks, more consumers are also reporting higher net worth - 29 percent say theirs has increased, while 23 percent say it has decreased - which one would expect to increase willingness to invest.
But such wealth numbers haven’t improved ordinary savers’ confidence in the stock market. Three-fourths of Americans, or 76 percent, are not more inclined to invest in the stock market than they were at this time last year, according to the study taken April 5 to 8. Only 18 percent are more likely to do so.
“Overall, there are several positives that can be taken from this month’s report,” said Greg McBride, senior financial analyst at Bankrate. “Americans are feeling better about the money they have in the bank and in their investment portfolios, and they’re also feeling better about what they owe.
“However, job security is still a pain point, and there are plenty of reasons to worry that we might be headed into a third straight weak summer for the economy. The trouble spots include jobs, high gas prices, the ongoing European debt crisis and more.”
The firm’s Financial Security Index hit a new high of 99.9, topping the previous high of 98.5 in May 2011. The baseline is 100, so any reading less than that indicates savers on average feel declining financial security compared to one year ago. The poll of Americans’ sentiments on economic matters has not registered a general feeling of improved financial security since it began in December 2010.
Twenty-nine percent of respondents said their overall financial situation is better than it was last April, while 26 percent said it is worse.
While Americans are leery about investing in the stock market, they seem content to save despite the paltry returns of less than 1 percent that traditional savings accounts now typically get.
Americans also feel more comfortable with their level of debt, a measurement at its highest point since June 2011. But only 20 percent say they are more secure in their jobs compared to last year.