More Americans than ever are invested in the stock market. Data from the Federal Reserve's Survey of Consumer Finances shows that 53% of all US families owned publicly traded stock in some form in 2019. That is up from 32% in 1989. The median stock value held among households in the market was $40,000.
The past year has brought ups and downs to the stock market — from the initial fallout of the pandemic to the recent rise of GameStop shares. But who did that affect? How has stock ownership changed, and who owns most of the stock market now?
The average stock owner is most likely to be invested through mutual funds and retirement plans.
There are different ways to acquire stock. People who buy stock on their own become direct owners. But people can invest in other ways, including actively managed mutual funds or passive versions like index funds, as well as through retirement plans that put their money in the stock market. Those avenues result in indirect ownership. Only 15% of US families directly owned stock in 2019; most families who owned stock in 2019 did so indirectly.
Between 1989 and 2019, the share of families with direct stock holdings actually fell from 17% to 15%. Instead, indirect investment was what drove the rise in total stock ownership, partly due to innovations like the 1981 Internal Revenue Service rules allowing 401(k) contributions to be deducted from paychecks; the 1993 development of exchange-traded funds; and the creation of Roth IRA accounts in 1997.
The top 10% of income earners own 10 times as much of the stock market as the bottom 60%.
Investing requires money, so it follows that families with higher incomes and net worth own stock more often and purchase more of it. But there are also differences in how they own the stock, with wealthier families much more likely to have directly purchased stock as part of their portfolio compared to those with lower incomes.
In 2019, only 15% percent of families in the bottom 20% of income earners held stock in some form, while 92% of families in the top 10% of the income distribution owned stock. Around 56% of families in the middle quintile — or the middle class — owned stock in 2019.
The gaps were even greater for direct stock ownership. Only 5% of families in the bottom quintile held stocks directly, while 12% of middle-class families and 44% of families in top 10% did.
The results are similarly skewed for Americans based on their net worth instead of income. Nearly half of families in the top 10% of the wealth distribution directly held stocks in 2019, and a total of 94% held stock either directly or indirectly. But for families in the bottom 25% of net worth, 4% directly held stocks, and a total of 21% percent held stocks in some way.
Wealthier Americans also tend to have more money in stock. Families in the top 10% of income earners accounted for 70% of the dollar value of all stock holdings in 2019, with a median of $432,000 worth of stock per invested household. Meanwhile, the bottom 60% of income earners owned only 7% of all stock that year. The median middle-class household invested in the stock market owned $15,000 worth of stock.
With higher-income Americans tending to own stock more frequently and in higher quantities, the stock market ends up accounting for a greater share of their combined assets as a group when compared to lower-income families. Stock made up only 9% of combined gross wealth for families in the bottom 20% of income earners in 2019; it made up 14% of wealth for the middle class and 27% of wealth for families in the top 10%.
The median white, non-Hispanic investor owns over three times as much stock as Black or Hispanic stockholders.
Because income and net worth are highly correlated with race and ethnicity, there are gaps in the tendency to own stock between white, Black, and Hispanic families as well. While 61% of white, non-Hispanic families owned some form of stock in 2019, that figure was only 34% for Black families and 24% for Hispanic families. The relative gaps for direct stock ownership are even larger.
There are also differences in the amount of money that different racial and ethnic groups own in stock. The median stock value owned among invested Black and Hispanic families was $15,000; it was almost $51,000 for non-Hispanic white families. Black families, who made up 14% of the families surveyed in 2019, held only 2% of total stock value. Hispanic families made up 10% of those surveyed but owned just over 1% of all stock. Meanwhile, white, non-Hispanic families made up 65% of those surveyed but owned 88% of stock value.
Stock holdings accounted for 24% of white, non-Hispanic families’ combined assets in 2019, surpassing even the total value stored in their primary homes. Stock made up only 13% of gross wealth for Black families and 10% for Hispanic families.
Ownership rates are highest for middle-aged Americans, but those 65 and older own the largest share of stock.
Families with a head of household aged 45 to 54 had the highest rate of stock ownership in 2019, with 58% of families in the stock market in some form. That said, the difference in ownership rates between age groups is not large. People 75 or older had the lowest ownership rate in 2019, at 47%, followed by those under 35, at 48%.
The value of stock owned, however, is much higher for older Americans, who have had more time to accumulate their investments. Families with a head of household 65 or older held 43% of the total dollar value of stock in 2019, with a median investment of $109,000 for stockholders 65 to 74 and $84,000 for those older. Families with a head of household aged 55 to 64 held another 29%, with a median of $72,700 worth of stock owned among those in the market.
Stock holdings made up 28% of the combined assets of people 75 and older, compared to 8% for people under 35 and 16% for people between 35 and 44.
As the stock market fluctuates, those with the most invested in the stock market also have the most to gain or lose. As the data shows, such people are mostly older, wealthier, non-Hispanic white Americans. Almost half of Americans have no stocks at all.
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