Who Invests in the Stock Market (By State)?
Hat tip to Big Picture Blog which had a post from a few St. Louis Fed researchers showing how stock market participation varies by state even when taking into account income levels:
Here's a chart showing how participation levels vary based on income level and highlights the state with the highest participation (Connecticut) and lowest participation levels (Mississippi):
Questions for students:
- Average household income in the U.S. is around $50,000. What percentage of individuals at that income level participate in the stock market?
- How would you describe the overall relationship between income levels and participation in the stock market?
- Explain why you think this relationship exists?
- Even 10-20% of individuals earning under $50,000 are investing in the stock market. How do you think they are able to accomplish this?
- Why do you think participation rates for individuals at similar income levels would vary by state?
- At what income levels does the biggest difference exist between participation levels in Connecticut as compared to Mississippi?
- What is your state's participation rate?
- Savings accounts earn less than 1% today while the stock market's historical returns are about 7-8% a year. Why do you think more people have savings accounts than participate in the stock market?
- What steps do you think your state could take to increase stock market participation? Be specific with your recommendations.
Interested in questions about investing and millennials? Check out this NGPF Question of the Day: What should I invest in as a first-time investor?
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.