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Recent and Likely Investor Households Segment Summary January 2014

Source: 2012–13 MacroMonitor

At the same time the stock markets are reaching unprecedented highs, basic retail investing is not rebounding. The proportion of households that are somewhat or very likely to invest in the next 12 months has tumbled from a peak in 2000 of 37% to 18% in 2012—the same proportion as in 1992. In 2012, the proportion of households that invested in the past two years (16%) is statistically the same as in 1994 (15%). To shed light on which factors are causing households to refrain from investing, a review of 2000–01 MacroMonitor data in comparison with 2012–13 MacroMonitor data reveals four key reasons why investors have not returned: demographics, declining trust in institutions and advisors, declining interest (disengagement), and increasing risk aversion.

Recent-investor households are households that bought at least one retail stock, mutual fund, or ETF in the past two years. Likely investor households are households that are somewhat or very likely to buy these investments in the next 12 months. For more detailed data, contact us to request the Excel file of tables and charts.


Between 2000 and 2012, the proportion of young and middle-class investors has declined significantly. Because fewer middle-class households than previously can afford to invest or to risk money in stock-market investments, only the "top 20%" are in a position to assume risk or to withstand loss. The decline in investor households contributes to growing wealth inequity and the decline of the middle class.

  • In 2000, 64% of household heads likely to invest and 57% of recent-investor household heads were younger than 50 years of age. In 2012, only 42% of likely investor household heads and 38% of investor household heads are younger than 50 years of age. In absolute and proportional terms, young investors are now fewer in number.
  • For example, 33% of Gen Xers, the youngest age cohort in 2000, were likely to invest in the next 12 months; in comparison, 19% of Millennials, the youngest age cohort in 2012, are likely to invest in the next 12 months.
  • In 2000, 62% of likely investor households and 54% of recent-investor households had total annual pretax incomes of less than $75K. In 2012, 41% of likely investor households and 38% of recent-investor households have total annual pretax incomes of less than $75K. Fewer households have the capacity to invest than previously.
  • In 2000, recent-investor households had a net worth of $603,300. In 2012, recent-investor households have a net worth of $1.7 million. Mature, well-established households—the primary focus of investment firms' marketing efforts—dominate. However, almost one-third are currently retired.
  • The Life Stage at which households become investors is further along the life path than previously. For example, 17% of single-no-child households in 2000 were recent investors; 20% were likely investors. In 2012, 8% of single-no-child households are recent investors; 7% are likely investors. Recent and likely investors in other Life Stages are roughly the same between 2000 and 2012.
  • In contrast, 9% of older retired households in 2000 were recent investors; 7% were likely investors. In 2012, 18% of older retired households are recent investors, and 14% are likely investors. The proportion of recent-investor households that are retired has roughly doubled between 2000 (16%) and 2012 (30%).


Households that are financially stable at present represent the majority of likely and recent investors: 45%. However, in 2012 only households that are secure or that have more than they need are more likely than average to be recent investors.

  • The proportions of households with specific savings and investment goals have declined between 2000 and 2012. For example, the incidences for all households (as well as recent- and likely investor households) are significantly lower for providing for retirement, providing for education, buying a home or vehicle, taking a vacation, and giving to charity: evidence of overall disengagement.
  • The most important factors in determining where to place savings and investments in 2012 are government insurance, guaranteed current income, and liquidity; all are risk-averse options.
  • Overall, all households are less inclined than previously to put a windfall of $25K in savings or investments: 73% in 2000, in comparison with 59% in 2012. Even among recent-investor households the decline from 85% in 2000 to 76% in 2012 is significant.
  • For likely investors, the mean amount of health-care-insurance expenditures more than doubled between 2000 ($1516) and 2012 ($3250).

Financial Attitudes and Tidbits

  • Although the proportion of investor households that trade securities has not changed in the past decade, the proportion of recent-investor households that trade without receiving advice has increased from 28% in 2000 to 40% in 2012, indicative of declining trust in financial professionals.
  • Incidences in the use of virtually any source for financial information by recent investors in 2012 are roughly half what they were in 2000. For example, use of books has declined from 30% to 15%, use of financial-institution brochures from 34% to 11%, and use of financial newsletters from 39% to 24%.
  • Fewer recent-investor households in 2012 than in 2000 would prefer to do most of their financial business in person (65% in 2000; 53% in 2012). "The less" these households "talk to financial-institution personnel, the better" has increased from 24% in 2000 to 41% in 2012.
  • Examples of recent-investor attitudes for which the incidences have increased are the importance of having both a guaranteed interest rate and federal insurance on my savings (from 68% to 79%), worry about the safety of deposits in banks and savings institutions (from 11% to 28%), the need—because of changes in the interest rate—to change the products in use to save and invest (from 35% to 50%), and reliance on Social Security for retirement income (from 23% to 38%).
  • Examples of recent-investor attitudes for which the incidences have decreased are: "It is wise to put some portion of savings in uninsured investments to get a high return" (from 67% to 54%), "I am willing to take substantial risks to realize substantial financial gains from investments" (from 55% to 37%), and "the stock market is too risky for me" (from 15% to 26%).


Before retail investing will improve, the proportion of households likely to make an investment in the next 12 months must increase significantly—at minimum, a 3% increase. It is reasonable to estimate that 3% of likely investors, as they mature and amass assets, will become investors. However, as more recent investors retire, draw down assets, and exit the marketplace, will a 3% increase in likely investors be enough to offset the increasing number of mature investors who will exit? Probably not. Because middle-class households are fewer than previously and because the mass-affluent market (at best) is not growing, finding 3% more likely investor households will be difficult—especially if trust and engagement do not improve. Very wealthy households will always exist and will likely continue to be the primary focus of interest for stockbrokerage firms. Competition for their concentrating dollars will escalate further. Will the increased wealth of wealthy households compensate for fewer affluent and mass-affluent households' investing? Probably not. Not only has the marketplace changed, but all the evidence suggests further concentration among households that invest and disengagement among households that, at the margin, have the capacity to invest for the foreseeable future.

New Deliverables for MacroMonitor Subscribers

If the households that are likely to invest are important to your business and you would like to learn more, contact us to request the edited data tables and charts on which this Segment Summary is based. An on-site presentation of these findings along with a Q&A session is available to MacroMonitor subscribers for a small additional fee.

Also available are the new January 2014 Dirty Dozen (a set of one dozen annotated graphic-analysis charts covering topics related to households that are likely to invest) and new Quick Stats (a ten-year trend of recent and likely investors).