Why Are People Holding So Much Cash?

Stock markets and other investments have been on a roll since early 2009. But not many investors have enjoyed the increase. Investors are holding a lot of cash in their portfolios, and they increased cash holdings as markets rose, according to a new study. Why? Mostly because after the financial crisis people don’t trust the markets or the people in them. It’s another cause of wealth inequality, since regular people are participating less and less in the markets.

So not only do investors distrust the market, but their distrust has also grown as the rally has continued. Why? To quote State Street, “the crisis of 2008 is burnt into their memories”. After two sell-offs in 15 years, younger investors simply do not trust financial companies.

When asked their best investment to date, easily the most popular was “land or property”. It outstripped equities, bonds, commodities and mutual funds. And two-thirds said their best investment had been “entirely” their own decision, speaking volumes of their distrust of financial advisers.