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Issue: 1115 Date: 1/5/2012
Become A Fan, Like St. Louis Chinese American News
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Younger investors aren't avoiding stocks, study finds
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More younger U.S. workers saving for retirement have a higher allocation to stocks than a decade ago, two groups that studied buying patterns said.
About 60 percent of 401(k) investors in their 20s had more than 80 percent of their accounts invested in equities at the end of 2010, compared with about 55 percent of investors in 2000, according to a report by the Investment Company Institute, a trade group for the mutual fund industry, and the Employee Benefit Research Institute, an on profit group.
"Younger investors are pursuing a diversified investment strategy that still relies heavily on stocks," said Sarah Holden, senior director of retirement and investor research at ICI. The data from EBRI and ICI, both based in Washington, was drawn from a database of about 23 million active 401(k) savings plan participants. An estimated 51 million American workers were using 401(k)s at year-end 2010, and assets totaled about $3trillion, according to the report.
Separate studies by ICI have shown that U.S. households are less willing to take on financial risk in the wake of the financial crisis in 2008, Holden said. Concern that younger individuals may be timid about buying stocks hasn't been borne out by the data on 401(k) participants, she said.
The number of younger workers with no equities in their 401(k) accounts also decreased at year-end 2010 to 9.4 percent from 14.6 percent in 2000, said Jack VanDerhei, research director at EBRI.
"A lot of that may not necessarily be due to employees themselves actively making that choice as much as it's them being automatically enrolled, being put in target-date funds," VanDerhei said.
Target-date funds move money from riskier investments such as stocks to more conservative alternatives as an investor reaches retirement. The funds were available in70 percent of 401(k) plans in 2010, according to the study. At the end of last year, 49percent of participants in their 20s held them, compared with 28 percent of savers in their 60s, the report said.
At the end of 2010, the average account balance of workers was $60,329, compared with $58,351 in 2009, the data show. The balances in this study are not based on a consistent sample year over year, the report said.
The average balance at Fidelity Investments, the largest provider of 401(k) plans, as of Sept. 30 was $64,300, a decline of about 2 percent from a year earlier, said BethMcHugh, vice president of market insights.
The percentage of participants with outstanding loans from their 401(k)s remained unchanged at year-end 2010 compared with 2009, the study said. Last year, 21 percent of workers had loans outstanding, which was higher than the 18 percent at the end of 2008, according to the report.
(By Margaret Collins, St. Louis Post-Dispatch) |
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