: Fewer younger people say they are investing in the stock market — as rental costs, child care and food prices eat into their savings


The stock market is looking a little brighter — for now.

The S&P 500 has recently recouped half of the fall from its early January high, and some fund managers are sounding less pessimistic about the toll inflation and rising interest rates have taken on the market.

But if the comeback has legs, a new survey indicates many younger investors and those with smaller incomes will be watching the rebound from the sidelines — mostly due to the rise in the cost of living over the last 12 months.

Fewer people say they are investing in the market compared to a year ago, and that’s driven by more cautious and risk-averse millennial and Generation Z households, according to Morning Consult research released Tuesday.

Roughly half (49%) of Generation Z adults, ages 18 to 25, said they had at least one investment product in July 2022, down from closer to 60% the same time last year. For millennials, ages 26 to 41, that share shrank to 57% from 70% last year.

Meanwhile, Generation X, ages 42 to 57, with at least one investment product increased to 60% from 56%. In the baby boomer demographic from age 58 to 76, two thirds said they had at least one investment, up from 61% a year ago.

On Tuesday, the Dow Jones Industrial Average

and the S&P 500

were slightly higher while the Nasdaq Composite

was treading water. Last week, the Nasdaq exited bear market territory, a fall of at least 20% from a recent high.

The investor pool risks becoming “increasingly homogenous” — or older and wealthier — said Charlotte Principato, financial services analyst at Morning Consult. “There are signals that this shift is already happening,” she added.

“With rents and child-care prices keep increasing at scorching rates, the data may provide a strong hint that many younger people can only tuck away so much for their long term investments.”

Over one-third of individual investors had annual incomes up to $50,000. Last year, a greater share of individual investors — 4 in 10 — had annual incomes under the $50,000 threshold, according to Morning Consult’s data.

Across all demographics, the shares of people using brokerage accounts, managed investment accounts and robo-advisers also fell from July 2021 to June 2022, according to the survey of 6,600 people collectively this year and last.

That’s not to say there’s a general cooling on stock market investing. One quarter of people said the stock market is the best place to tuck away money they will not need to tap for a decade, according to a recent survey.

But with rents and child-care prices keep increasing at scorching rates, the data may provide a strong hint that many younger people can only tuck away so much for their long term investments.

July’s consumer price index — up 8.5% on the year — was cooler than previous months, yet roughly half (53%) of people reported having extra money at the end of the month in June, compared to 61% a year ago, the Morning Consult data showed.

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