Vanguard's How America Invests - 2020 Report

[GreenToTheCore]

Vanguard just put out a report out on some data from 2015-2019.
While it's a little disingenuous to suggest that the Vanguard client population is representative of the American population, it's a fun read.

What do you find surprising? Obvious? Entertaining?


https://investornews.vanguard/introducing-how-america-invests/?cmpgn=RIG:EM:CMPGN:SELDIR:12032020:TXL:TXT:HOWAMINVEMLONG:EDU:MTOP:RGP:XXX:ALL:POS01:XX
https://personal.vanguard.com/pdf/how-america-invests-2020.pdf
https://personal.vanguard.com/pdf/how-america-invests-2020-investor-action-guide.pdf

Fun tidbit:

Portfolios are becoming more index-oriented
The proportion of households building portfolios with active investments is falling, consistent with a broader shift to passive strategies that's characterized the asset management industry since the 2008 global financial crisis. The decline in use of active strategies is from a reduction in both the proportion of households building all-active portfolios and those building mixed active-passive portfolios. Active investors tend to be older and longer-tenured Vanguard households, possibly because active strategies were more popular when those accounts were initially opened.

[happychineseboy]

I think it is interesting that people with both IRA + taxable brokerage accounts at Vanguard have on average 300k+. This class of investor also has the lowest cash holdings of any other investor class

I was also shocked that 10-15% of investors have their entire IRA in cash/money market funds

[MoneyGoatee]

I think it is interesting that people with both IRA + taxable brokerage accounts at Vanguard have on average 300k+. This class of investor also has the lowest cash holdings of any other investor class

I was also shocked that 10-15% of investors have their entire IRA in cash/money market funds

If you are referring to Figure 10, which shows 15% of people put zero equity into IRA, then zero equity can also mean bond funds.  I put several taxable bond funds into my IRA to reduce taxes.  I received $30k interests from bond funds last year, which would've incurred thousands of dollars of tax if I hadn't put some of the bonds into tax-free zones like IRA.  And one of my IRA accounts has bonds only, so I belong to those 15% of people too.

Notable is Figure 6, which shows median balance by age.  Age groups 55-64, 65-74, 75-84, and 85+ have median balances of $104k, $192k, $241k, and $224k respectively.  These are lower than Fed Reserve data on Americans' net worth: age 55-64, 65-74, 75+ having net worth $213k, $266k, $255k respectively.  Fed's data include non-investors too.  And many Vanguard investors likely have other assets that count towards their net worth.  These numbers still don't reveal what I've always wanted to know: net worth of non-investors vs. investors.

Another interesting finding is that the median household size of Vanguard investors is 1 (page 6).  That means more than half of these people live alone, if my interpretation of the word "median" is correct.  E.g. the median size of 11 households is the one in bold: 1, 1, 1, 1, 1, 1, 4, 6, 6, 10, 20.

The median "number of investments" is 2 (page 6).  Anyone know what that means?  2 investments, as in 2 funds in an account?

Page 4 says 99% of investors "stayed the course" in 2020 despite the pandemic and economic downturn.  "Stayed the course" is defined as "less than 1% of households abandoned equities completely."  That is probably not a good definition.  If you went from 2% equities to 0% equity, your portfolio was basically unchanged and you essentially stayed the course, but not under this definition.