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True or False: The largest component of household sector wealth is wealth in the stock...

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lilylee | Student, College Freshman | Salutatorian

Posted July 3, 2013 at 2:01 PM via web

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True or False: The largest component of household sector wealth is wealth in the stock market.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted July 3, 2013 at 2:19 PM (Answer #1)

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This statement is true.  Although there are many households that do not have any money at all in the stock market, the overall statistics show that stock market holdings make up the majority of the wealth of all wealth held by American households.  This has not always been the case.

In the past, the value of a household’s home made up a much greater percentage of the household’s wealth than it does today.  In addition, people used to hold much more money in accounts, such as savings accounts and certificates of deposit, that bore interest.  However, interest rates are so low now that it is much less useful to put money in such accounts.

Today, as can be seen in the final graph in this link, households have more of their wealth in the stock market than anywhere else.

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