Stock market

Indirect investment involves owning shares indirectly, such as via a mutual fund or an exchange traded fund. Direct investment involves direct ownership of shares.{{cite web | url=https://investorjunkie.com/investing/direct-vs-indirect-shares/ | title=What's the Difference Between Direct and Indirect Shares? | date=August 14, 2018 | publisher=InvestorJunkie | access-date=December 7, 2019 | archive-date=April 14, 2021 | archive-url=https://web.archive.org/web/20210414160248/https://investorjunkie.com/investing/direct-vs-indirect-shares/ | url-status=live }}

Indirect investment involves owning shares indirectly, such as via a mutual fund or an exchange traded fund. Direct investment involves direct ownership of shares.{{cite web | url=https://investorjunkie.com/investing/direct-vs-indirect-shares/ | title=What's the Difference Between Direct and Indirect Shares? | date=August 14, 2018 | publisher=InvestorJunkie | access-date=December 7, 2019 | archive-date=April 14, 2021 | archive-url=https://web.archive.org/web/20210414160248/https://investorjunkie.com/investing/direct-vs-indirect-shares/ | url-status=live }}

Direct ownership of stock by individuals rose slightly from 17.8% in 1992 to 17.9% in 2007, with the median value of these holdings rising from $14,778 to $17,000.{{Cite report |date=September 1995 |title=Statistical Abstract of the United States: 1995 |url=https://www.census.gov/library/publications/1995/compendia/statab/115ed.html |publisher=United States Census Bureau |page=513 |access-date=December 17, 2015 |archive-date=April 16, 2021 |archive-url=https://web.archive.org/web/20210416133352/https://www.census.gov/library/publications/1995/compendia/statab/115ed.html |url-status=live }}{{Cite report |date=August 2011 |title=Statistical Abstract of the United States: 2012 |url=https://www.census.gov/library/publications/2011/compendia/statab/131ed.html?cssp=SERP |publisher=United States Census Bureau |page=730 |access-date=December 17, 2015 |archive-date=April 17, 2021 |archive-url=https://web.archive.org/web/20210417122126/https://www.census.gov/library/publications/2011/compendia/statab/131ed.html?cssp=SERP |url-status=live }} Indirect participation in the form of retirement accounts rose from 39.3% in 1992 to 52.6% in 2007, with the median value of these accounts more than doubling from $22,000 to $45,000 in that time. Rydqvist, Spizman, and [[Ilya Strebulaev|Strebulaev]] attribute the differential growth in direct and indirect holdings to differences in the way each are taxed in the United States. Investments in pension funds and 401ks, the two most common vehicles of indirect participation, are taxed only when funds are withdrawn from the accounts. Conversely, the money used to directly purchase stock is subject to taxation as are any dividends or capital gains they generate for the holder. In this way, the current tax code incentivizes individuals to invest indirectly.{{Cite journal | title=Government Policy and Ownership of Financial Assets | journal=NBER Working Paper Series | date=January 1, 2013 | first1 = Kristian | last1=Rydqvist | first2=Joshua | last2=Spizman | first3=Ilya A. | last3=Strebulaev | doi=10.2139/ssrn.1428442 | ssrn=1428442| s2cid=154598793 | url=http://www.nber.org/papers/w17522.pdf | archive-url=https://web.archive.org/web/20160121212119/http://www.nber.org/papers/w17522.pdf | archive-date=January 21, 2016 | url-status=dead }}

Direct ownership of stock by individuals rose slightly from 17.8% in 1992 to 17.9% in 2007, with the median value of these holdings rising from $14,778 to $17,000.{{Cite report |date=September 1995 |title=Statistical Abstract of the United States: 1995 |url=https://www.census.gov/library/publications/1995/compendia/statab/115ed.html |publisher=United States Census Bureau |page=513 |access-date=December 17, 2015 |archive-date=April 16, 2021 |archive-url=https://web.archive.org/web/20210416133352/https://www.census.gov/library/publications/1995/compendia/statab/115ed.html |url-status=live }}{{Cite report |date=August 2011 |title=Statistical Abstract of the United States: 2012 |url=https://www.census.gov/library/publications/2011/compendia/statab/131ed.html?cssp=SERP |publisher=United States Census Bureau |page=730 |access-date=December 17, 2015 |archive-date=April 17, 2021 |archive-url=https://web.archive.org/web/20210417122126/https://www.census.gov/library/publications/2011/compendia/statab/131ed.html?cssp=SERP |url-status=live }} Indirect participation in the form of retirement accounts rose from 39.3% in 1992 to 52.6% in 2007, with the median value of these accounts more than doubling from $22,000 to $45,000 in that time. Rydqvist, Spizman, and [[Ilya Strebulaev|Strebulaev]] attribute the differential growth in direct and indirect holdings to differences in the way each are taxed in the United States. Investments in pension funds and 401ks, the two most common vehicles of indirect participation, are taxed only when funds are withdrawn from the accounts. Conversely, the money used to directly purchase stock is subject to taxation as are any dividends or capital gains they generate for the holder. In this way, the current tax code incentivizes individuals to invest indirectly.{{Cite journal | title=Government Policy and Ownership of Financial Assets | journal=NBER Working Paper Series | date=January 1, 2013 | first1 = Kristian | last1=Rydqvist | first2=Joshua | last2=Spizman | first3=Ilya A. | last3=Strebulaev | doi=10.2139/ssrn.1428442 | ssrn=1428442| s2cid=154598793 | url=http://www.nber.org/papers/w17522.pdf | archive-url=https://web.archive.org/web/20160121212119/http://www.nber.org/papers/w17522.pdf | archive-date=January 21, 2016 | url-status=dead }}

==== Participation by income and wealth strata ====

==== Participation by income and wealth strata ====

[[File:2015- Ownership of stocks and mutual funds by wealth class.svg |thumb |In 2025, the wealthiest 1% of Americans owned nearly 50% of the stock market. The top 10% own 87.2%, and the bottom half owned 1.1%.{{cite news |last1=Aratani |first1=Lauren |title=The K-shaped Christmas: wealthy few drive holiday spending splurge while many struggle to get by |url=https://www.theguardian.com/business/2025/dec/07/stock-prices-fuel-christmas-us-economy |newspaper=The Guardian |date=7 December 2025 |archive-url=https://web.archive.org/web/20251208043249/https://www.theguardian.com/business/2025/dec/07/stock-prices-fuel-christmas-us-economy |archive-date=8 December 2025 |quote=Source: Federal Reserve Bank of St Louis. |url-status=live}}{{cite web |title=FRED graph / Corporate Equities and Mutual Fund Shares Held by ... |url=https://fred.stlouisfed.org/graph/?g=Y8rM |publisher=Federal Reserve Bank of St. Louis |archive-url=https://web.archive.org/web/20251210054153/https://fred.stlouisfed.org/graph/?g=Y8rM |archive-date=10 December 2025 |date=December 2025 |url-status=live}} (click "Download")]]

[[File:2015- Ownership of stocks and mutual funds by wealth class.svg |thumb |In 2025, the wealthiest 1% of Americans owned nearly 50% of the stock market. The top 10% own 87.2%, and the bottom half owned 1.1%.{{cite news |last1=Aratani |first1=Lauren |title=The K-shaped Christmas: wealthy few drive holiday spending splurge while many struggle to get by |url=https://www.theguardian.com/business/2025/dec/07/stock-prices-fuel-christmas-us-economy |newspaper=The Guardian |date=7 December 2025 |archive-url=https://web.archive.org/web/20251208043249/https://www.theguardian.com/business/2025/dec/07/stock-prices-fuel-christmas-us-economy |archive-date=8 December 2025 |quote=Source: Federal Reserve Bank of St Louis. |url-status=live}}{{cite web |title=FRED graph / Corporate Equities and Mutual Fund Shares Held by ... |url=https://fred.stlouisfed.org/graph/?g=Y8rM |publisher=Federal Reserve Bank of St. Louis |archive-url=https://web.archive.org/web/20251210054153/https://fred.stlouisfed.org/graph/?g=Y8rM |archive-date=10 December 2025 |date=December 2025 |url-status=live}} (click "Download")]]

Rates of participation and the value of holdings differ significantly across strata of income. In the bottom quintile of income, 5.5% of households directly own stock and 10.7% hold stocks indirectly in the form of retirement accounts. The top decile of income has a direct participation rate of 47.5% and an indirect participation rate in the form of retirement accounts of 89.6%. The median value of directly owned stock in the bottom quintile of income is $4,000 and is $78,600 in the top decile of income as of 2007. The median value of indirectly held stock in the form of retirement accounts for the same two groups in the same year is $6,300 and $214,800 respectively.{{Cite report | title=Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances | url=http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf | publisher=Federal Reserve Board of Governors | page=24 | date=June 2012 | access-date=October 21, 2015 | archive-date=October 13, 2015 | archive-url=https://web.archive.org/web/20151013164007/http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf | url-status=live }} Since the Great Recession of 2008 households in the bottom half of the [[income distribution]] have lessened their participation rate both directly and indirectly from 53.2% in 2007 to 48.8% in 2013, while over the same period households in the top decile of the income distribution slightly increased participation 91.7% to 92.1%.{{Cite report | date=September 2014 | title=Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances | url=http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf | publisher=Federal Reserve Board of Governors | page=20 | access-date=December 17, 2015 | archive-date=November 2, 2015 | archive-url=https://web.archive.org/web/20151102234959/http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf | url-status=live }} The mean value of direct and indirect holdings at the bottom half of the income distribution moved slightly downward from $53,800 in 2007 to $53,600 in 2013. In the top decile, mean value of all holdings fell from $982,000 to $969,300 in the same time. The mean value of all stock holdings across the entire income distribution is valued at $269,900 as of 2013.

Rates of participation and the value of holdings differ significantly across strata of income. In the bottom quintile of income, 5.5% of households directly own stock and 10.7% hold stocks indirectly in the form of retirement accounts. The top decile of income has a direct participation rate of 47.5% and an indirect participation rate in the form of retirement accounts of 89.6%. The median value of directly owned stock in the bottom quintile of income is $4,000 and is $78,600 in the top decile of income as of 2007. The median value of indirectly held stock in the form of retirement accounts for the same two groups in the same year is $6,300 and $214,800 respectively.{{Cite report | title=Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances | url=http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf | publisher=Federal Reserve Board of Governors | page=24 | date=June 2012 | access-date=October 21, 2015 | archive-date=October 13, 2015 | archive-url=https://web.archive.org/web/20151013164007/http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf | url-status=live }} Since the Great Recession of 2008 households in the bottom half of the [[income distribution]] have lessened their participation rate both directly and indirectly from 53.2% in 2007 to 48.8% in 2013, while over the same period households in the top decile of the income distribution slightly increased participation 91.7% to 92.1%.{{Cite report | date=September 2014 | title=Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances | url=http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf | publisher=Federal Reserve Board of Governors | page=20 | access-date=December 17, 2015 | archive-date=November 2, 2015 | archive-url=https://web.archive.org/web/20151102234959/http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf | url-status=live }} The mean value of direct and indirect holdings at the bottom half of the income distribution moved slightly downward from $53,800 in 2007 to $53,600 in 2013. In the top decile, mean value of all holdings fell from $982,000 to $969,300 in the same time. The mean value of all stock holdings across the entire income distribution is valued at $269,900 as of 2013.

====Participation by race and gender====

====Participation by race and gender====

The racial composition of stock market ownership shows households headed by whites are nearly four and six times as likely to directly own stocks than households headed by blacks and Hispanics respectively. As of 2011 the national rate of direct participation was 19.6%, for white households the participation rate was 24.5%, for black households it was 6.4% and for Hispanic households it was 4.3%. Indirect participation in the form of 401k ownership shows a similar pattern with a national participation rate of 42.1%, a rate of 46.4% for white households, 31.7% for black households, and 25.8% for Hispanic households. Households headed by married couples participated at rates above the national averages with 25.6% participating directly and 53.4% participating indirectly through a retirement account. 14.7% of households headed by men participated in the market directly and 33.4% owned stock through a retirement account. 12.6% of female-headed households directly owned stock and 28.7% owned stock indirectly.

The racial composition of stock market ownership shows households headed by whites are nearly four and six times as likely to directly own stocks than households headed by blacks and Hispanics respectively. As of 2011 the national rate of direct participation was 19.6%, for white households the participation rate was 24.5%, for black households it was 6.4% and for Hispanic households it was 4.3%. Indirect participation in the form of 401k ownership shows a similar pattern with a national participation rate of 42.1%, a rate of 46.4% for white households, 31.7% for black households, and 25.8% for Hispanic households. Households headed by married couples participated at rates above the national averages with 25.6% participating directly and 53.4% participating indirectly through a retirement account. 14.7% of households headed by men participated in the market directly and 33.4% owned stock through a retirement account. 12.6% of female-headed households directly owned stock and 28.7% owned stock indirectly.

====Determinants and possible explanations of stock market participation====

====Determinants and possible explanations of stock market participation====