More Americans hold stocks, for better or for worse

In this Feb. 6 photo, a passer-by peers in the window while investors congregate inside at the Fidelity Investments office on Congress Street as the ticker displays stock market numbers in Boston. A plunge in stock prices always stings, but this recent one dug deeper because more of the country has become exposed to the ups and downs of the market, particularly older Americans. (AP photo)

NEW YORK — A plunge in stock prices always stings, but this recent one dug deeper because more Americans are participating in the market, particularly older ones.

Slightly more than half of all U.S. families own stocks in some way, from workers who got automatically enrolled into their 401(k) retirement accounts to day-traders working their personal accounts. The rate of stock ownership is the highest since the dawn of the Great Recession in 2007.

On the whole, higher stock ownership can be a good thing: It means more Americans, not just the wealthiest, have benefited from the record-setting returns that stocks have delivered since the current bull market started in early 2009. But there can be a downside: Many Americans are also keeping bigger portions of their portfolios in stocks than experts recommend, led by baby boomers, which accentuates the impact of each swing in the market. Even Americans age 75 and over are more likely to own stocks than at any time since the 1980s, according to data from the Federal Reserve.

Some investors may have been blissfully unaware that stocks were growing to an ever-larger portion of their portfolio as stock prices swelled in recent years. Others bought even more stocks because they were afraid of missing out on the amazingly big and smooth gains that the market had been delivering before Monday’s loss, the worst day in more than six years.

Either way, nearly 23 percent of savers with a 401(k) at Fidelity had a bigger percentage of their account in stocks than the investment giant recommends, according to the company’s most recent data from this past autumn.

Savers nearing retirement, for example, should have a portfolio with roughly 60 percent in stocks and 40 percent in bonds and cash, Fidelity says. The average baby boomer handling investment decisions for their 401(k) has 70 percent in stocks, according to Fidelity.

“We give them the same advice when the market is high as when it’s low,” said Jeanne Thompson, senior vice president at Fidelity Investments. “Make sure to check that you’re properly allocated and not taking too much risk. Make sure you’re able to sleep at night.”