Is the stock market still valuable? - - The News for South Mississippi

Is the stock market still valuable?

Interest rates on savings accounts are at rock-bottom, and the market's rebounded nicely since 2009. So why aren't Americans getting back into the stock market? 

A recent survey from Bankrate finds a whopping 76 percent of people polled are still saying no to stocks. 

Psychology is a big part of it. They saw a big chunk of their portfolios wiped out when stocks tanked during the recession. 

And that has made them very jittery, so they sat out the rebound. Now that stocks are at a high point, they may think the market's too expensive, or that a big correction is coming. 

So what are all of these people doing with their money? 

Well, they're putting it in bonds. According to the Investment Company Institute, stock mutual funds saw outflows of $1.2 billion. Meanwhile, bond funds saw $34.1 billion dollars flowing in. 

The thought being, of course, that bonds are always safer than stocks. But bond values go down when interest rates go up, so if the Federal Reserve is going to act to raise interest rates soon, that could knock the bond market around. 

"Making investment decisions based on fear is not a good strategy. If you're young, you're going to get the most bang for your buck from stocks, and should have plenty of time to ride out fluctuations," says Money Expert Nathan Bachrach. "Now, older investors -- you need a diversified portfolio across different asset classes. Working with a financial advisor can help remove nerves from the equation."

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