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Where You Are...Part Three
Some one was told me that the difference between rich kids and not so rich kids is simple. Rich kids read, and not so rich ones watch television. The same can be said for mutual fund investors.
Although statistically, the largest group of mutual fund holders fall between the income range $25,000 and $75,000, the households whose income exceeds this holds more of their cash in mutual funds as a percentage of investments that do less well to do households. Perhaps they have seen the overall investment value in owning such a vehicle.
Let me break this down for you:
The under $50,000 group will find only 29% of their assets in mutual funds. Households that exceed this annual income hold over 70% of their assets in some sort of mutual fund. This is a telling statistic considering that the popular conception of the rich is that they are more speculative and invest more in individual stocks than mutual funds. But the real truth lies in the fact the having money creates a more defensive investor. This caution, while also allowing high returns, also allows the more moneyed investor peace of mind that their wealth is being protected.
In slightly less than twenty years, the average household ownership of mutual funds has increased from 5.7% in 1980 to almost 47.4% in 1999 or 48 million households own something in the mutual fund arena. This number has increased every year since these types of numbers have been accumulated. Most have benefited from ownership through 401(k) type plans, IRA's and pension plans. 82 million people own mutual funds in this country; up from 77 million the year previous. 80% of these funds are owned by folks in the 30-64 age group, which is something that shouldn't surprise most people.
The good news continues as investor flock towards funds in ever growing numbers. The expense of owning these funds has dropped considerably. The average equity (stock) fund has fallen form a high of 2.42% to 1.35%. These expense are indirectly paid by the shareholder and the payment comes from assets held.
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