Stock market today mostly higher after a late wave of buying

This year, a near record 61% of Americans say they own stock of some sort, whether individually or through a tax-advantaged retirement account like a 401(k).

But what does the typical American’s investment behavior look like across different assets, and why are more people investing in the stock market in recent years despite its swings?

Magnifi, an AI investing app, analyzed data from Gallup and the Federal Reserve to illustrate how Americans invest their income across various assets today.

Scientists at Gallup and data scientists at the Federal Reserve have been tracking these behaviors through surveys and financial data points over the last several decades. And those experts have found a correlation between income, education, age, relationships, and race that help us better understand how the typical American invests their money.

The COVID-19 pandemic flipped societies around the globe upside down. Yet, the pandemic era may also have served as a cap on a more than decade-long economic recovery that helped shift American investing habits.

In 2021 cryptocurrency was the word on everyone’s lips. NFTs were sold as the future of alternative asset investing and protecting intellectual property online through blockchain technology. Americans had extra cash in their pockets in the form of thousands of dollars in government stimulus. And homes were selling like hotcakes to a generation that came of age during the worst housing collapse in modern U.S. history. Millennials made up the largest generation of buyers at 43% of all home purchases in 2021.

By 2022, however, the markets took a turn for the worse, erasing many of the gains made in previous years as inflation wore down companies and consumers alike. Higher interest rates set by the Federal Reserve to curb inflation made housing unaffordable to many, besides the wealthiest baby boomers.

A study Bankrate performed last year found that just 18% of Americans planned to invest more money into the stock market in the face of the volatility.

However, in the lead-up to last year’s market correction, Americans were investing like they haven’t in at least 15 years. Any fears still lingering from the one-two punch of a weakened stock market and falling real estate values after the 2008 financial crisis were fading.

After decades of watching older generations build nest eggs through retirement accounts and rental property portfolios, investors showed the most interest in real estate and stocks.