Record High Millionaire Accounts in Retirement Pension 401K
Investing 401K Savings in Stocks → Wealth 'Virtuous Cycle'
S&P 500 Index Hits All-Time High 36 Times This Year
Investment Confidence That It Will Rise Eventually Despite Market Crash
"Wow, I was just looking at my 401K (U.S. retirement plan), and this is a gift from God!" (51-year-old American Steve Ethridge)
Many Americans have been able to become wealthy thanks to their domestic stock market, which has shown an upward trend, reported The Wall Street Journal (WSJ) on the 2nd (local time). Even after the so-called 'Black Monday' last month, which caused a crash in asset markets, buying continued in the U.S. stock market, reflecting the optimistic investment sentiment of Americans who have learned from the experience of steadily rising stocks.
According to data from U.S. financial services firm Fidelity Investments cited by WSJ, as of the second quarter, the number of 401K accounts holding at least $1 million reached about 497,000. This represents a 31% increase compared to a year ago and is the highest number of accounts ever recorded.
A significant portion of 401K funds is invested in U.S. stocks, creating a virtuous cycle where rising stock prices lead to increased retirement assets. WSJ explained, "The soaring U.S. stock market has helped sharply increase Americans' net worth and created many millionaires."
The S&P 500 index, composed of leading U.S. companies such as Apple, Microsoft (MS), and Nvidia, hit record highs 36 times this year alone. The year-to-date increase is 19%. The tech-heavy Nasdaq index has risen 20% so far this year. As the U.S. stock market climbed, the proportion of direct household stock investments also increased. According to JP Morgan, stocks account for 42% of Americans' financial assets, the highest proportion since data collection began in 1952.
Among professional investors, the dominant outlook is that the U.S. stock market will continue its rally. According to the Commodity Futures Trading Commission (CFTC), net bullish bets linked to S&P 500 futures by asset managers rose to the highest level since 2020 in July.
Last month, concerns about a recession, unwinding of yen carry trades, and controversies over excessive investment in artificial intelligence (AI) combined as negative factors casting a shadow over the stock market on Black Monday. However, the U.S. stock market crash was merely a brief episode and quickly recovered. According to financial information firm EPFR, buying in U.S. stock funds continued for eight consecutive weeks through the end of last month.
WSJ analyzed this in connection with the fact that many Americans see corrections as opportunities and continue to buy more, believing the market will rise again. William Borod, a 67-year-old dentist living in Springfield, New Jersey, told WSJ, "The most conservative approach to (the U.S. stock market crash) is 'always, all in (all in, all the time).'" He emphasized, "Stocks have risen in recent years, allowing me to add a boat to my vacation home in Jersey Shore."
Son Perkin, president of Papamarco Welner Asset Management in the U.S., told WSJ, "We view the (U.S.) stock market optimistically and are telling our clients that now is the right time to invest."
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