By Peter Andrew
I did it. I finally did it! Last fall, very late in life for such things, I finally lost my stock market virginity. I'm now the proud owner of shares in not one but two companies. And things are going really well. I invested $3,900 back then, and my holdings are now worth $4,900. On the night after Warren Buffet sees this article -- and who could doubt he will? -- sleep may well elude him.
Cash currently king
Of course, I'm more than pleased with how my investment has grown. And you might assume that those who have deposits today in savings accounts would be green with envy. But no. Many people make an informed choice to keep their money in cash (sometimes literally, but usually in bank accounts) rather than invest it in equities, stocks and shares. By the way, although there are distinctions in the meanings of those three words, there are also large overlaps, and for our purposes today we can use them interchangeably.
In May, the State Street Center for Applied Research found that 36 percent of Americans' assets were held in cash. Extraordinarily, that was up from 26 percent in 2012, just two years earlier. And this rise -- which occurred across all age groups and wealth levels -- was in spite of the fact that, by the end of 2013, all the three main U.S. stock indices were up at least 26 percent from the start of that year. So what is it that makes so many settle for one-twentieth the return, which is common among even the most generous high-interest savings accounts? You can sum it up in a word: fear.Read the full article »