This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Young People Are Loading Up on Stocks

NEW YORK (TheStreet) -- After suffering through a decade of volatile markets, many young people have soured on stocks. Investors who were born from 1970 through 1979 have less than 40% of their assets in stocks, according to a study by Investment Company Institute. In contrast, investors who were born from 1950 through 1959 retain faith in stocks, keeping more than 50% of assets in equities.

Seeing the data, pundits have worried that a generation may have abandoned the stock market. But that assessment is too bleak. While some investors have undoubtedly turned away from trading, young people have been increasing the stock allocations in their 401(k) plans. The transition to equities has occurred steadily in recent years -- even during the financial crisis. According to a study by Vanguard Group, participants in their early 20s had 41% of 401(k) assets in equities in 2003. By 2010, savers in their early 20s had 85% of assets in stocks.

Are the young plan participants eagerly anticipating another big bull market? Probably not. Much of the shift in 401(k) plans can be traced to the growing use of target-date retirement funds. The funds automatically put young people into hefty stock allocations. Many plan participants know little about investing, but they are opting for the target-date choices because the funds are promoted by employers.

According to the Investment Company Institute, new plan participants in their 20s now put about 44% of their 401(k) assets in target funds and other balanced funds. That is a big change from 1998 when young participants only put 7% in the funds. Target-date funds now have $374 billion in assets, up from $71 billion four years ago.

10 Stocks That Could Rise in Market Decline

Holding diversified collections of stocks and bonds, the target funds are designed for savers who will retire around a certain date such as 2020 or 2050. As the savers age, the asset allocations are adjusted. Funds that serve savers in their 20s or 30s can have as much as 90% of assets in equities. The equity allocation is reduced as the retirement date approaches. Retirees can have less than 40% of assets in stocks.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.22 -1.70%
FB $116.68 -0.04%
GOOG $691.06 0.01%
TSLA $246.20 -0.61%
YHOO $36.32 -0.74%


Chart of I:DJI
DOW 17,734.30 -96.46 -0.54%
S&P 500 2,064.27 -11.54 -0.56%
NASDAQ 4,781.1390 -24.1520 -0.50%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs