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Household Participation in Stock Market Varies Widely by State

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Letter Writer:

Raymond D’Hollander, Fayetteville, N.Y., an engineer

Date Posted:

Dec. 15, 2017

Letter:

I think the methodology in this analysis is very flawed, and a wide variety of conclusions could, therefore, be drawn.

Our household falls within the key household income group discussed. We do all of our savings within tax-deferred retirement vehicles and have substantial savings, with about 75 percent in equities. We never report dividends because we own no equities outside the tax-deferred accounts; so, we are a reason that they report low participation in the stock market.

So an alternative explanation of the data shown in this paper is that the people in the states with high stock market participation rates are investing in tax-inefficient vehicles and could benefit from financial advice to put more or all of their savings into tax-deferred plans. Between Roth and Regular IRAs, 401(k)s, and 403(b)s, there is no reason for anybody making less than $200k per year to have ANY taxable stock dividends.

We may have a retirement crisis, but it is not because people are not buying stocks outside of tax-deferred accounts.