These 37 Million People Will Never Buy Stocks

It depends on how you look at it. The Federal Reserve says that almost no one in the bottom 50% of Americans based on income owns stocks. More precisely, only .6% of them do. People who live in poverty also don’t own stocks. At a poverty line of 12%, that is about 37 million people.

At the other end of the income scale, 84% of households with over $100,000 in annual income are stock owners. Additionally, 93% of the wealthiest 10% of America are stockholders.

The primary reason people below the poverty line don’t own stocks is that they barely have a dime of discretionary income. That means they don’t contribute to GDP. People who live in a family of three are below the poverty line if they have an annual household income of $26,650 or less. After taxes for federal, state, and Society Security, their net income is probably not much more than $20,000.

Low Average Monthly Income

The average American spends $3,000 on gas a year. The average monthly rent for a low-income household is about $1,200, nearly $15,000 a year. That means money left for food and clothing is $2,000 to $3,000 annually.

Another tier of those who don’t own stocks is those whose incomes depend entirely on Social Security. Thirty-seven percent of people who get Social Security have it as their only income, about 25 million people.

US News reports that 42% of people do not have any savings. Calculating that number is difficult, but it undoubtedly includes tens of millions of households.

Does It Matter?

Does the fact that so many Americans don’t own stocks or never will matter? No. Two sets of people drive the stock market. Institutions own about 70% of the total market capitalization of all stocks in the US. While individuals own stocks, they do little to control the market. Institutions also represent about 70% of daily trading volume.

The market does not need 37 million poor Americans to operate smoothly. It doesn’t matter to the extent they will never participate.