According to a new poll conducted by the Associated Press and CNBC, investing in the stock market is disconcerting for many American investors, especially those with smaller portfolios. The survey revealed nearly 90 percent of investors with portfolios less than $50,000 prefer savings accounts because they feel the market shows favoritism towards investors with more money.
The Market Shows Favoritism
All investors who participated in the new poll released on Tuesday morning seemed to have unanimous feelings about the favoritism shown by Wall Street. While it was evident from the numbers that those who made smaller investments didn’t feel that they received the treatment they deserved, the “big guys” shared the same sentiment.
In the poll, 75 percent of investors with more than $250,000 felt the market was unfair to investors bringing in smaller numbers, too. This may have something to do with the nature of the market and the fact that the more that is in an account, the longer it is held, the more diversified a portfolio is, the more gains that will likely be made over time.
Eighty percent of the investors surveyed agreed with the fact that keeping money in an account longer is the best way to make gains in the market, yet still many are moving money out.
Investors Moving Money Away from Stocks
Even though both the “little” and “big” investors of the stock market understand how to invest, many are still shying away from stocks. According to the Investment Company Institute, from January 2008 through July 2010, investors pulled $244 billion out of stock mutual funds.
During the same period, investors put nearly $589 billion into bond funds. Some say this has something to do with the volatility reported in recent market news.
Sixty percent of investors surveyed said they had watched the news and found recent information regarding the volatility of the market unsettling. They even feel less secure after May’s “flash crash” that plunged the Dow by 1,000 points. As a result, 61 percent said volatility leaves them unsure about buying and selling individual stocks.
The poll determined that these numbers confirm a lack of investor confidence in the market. They’re no longer sure that it is the right place for their money, especially when investing for retirement.
Do You Share the Same Sentiment?
If you feel the same way many of the investors polled do, it’s good to know there are tons of investment options out there to help you save for retirement and beyond. You don’t have to stick solely to stocks if they make you uncomfortable. There are mutual funds, ETFs, bonds and of course your 401k and IRA options.
If you want to take an even less volatile route, you could consider CDs, money markets and high-interest savings accounts to earn some interest on your deposit.
