Baby boomers and Gen X are all over the stock market. Seriously, Americans over 55 account for 80% of U.S. stock ownership, according to Rosenberg Research. Here’s why that matters.
Investing priorities change throughout a person’s life. A younger investor may prioritize building a safety net, saving up for a downpayment, or investing to fund their eventual kids’ education. But when people get closer to retirement, their priorities shift again.
Simply put, an older investor will likely have less risk appetite than a younger one. Meanwhile, in retirement, savings are being used to live off, so older investors may be more incentivized to pull their money out of the stock market in times of trouble — something investors for the long-haul are often advised against. And therein lies the risk.
If the stock market has a rocky year, could we see a lot of older investors cashing out? It’s possible, and it could make any potential downturn worse.
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