Take stock of your investments, if you have them

A recent survey by bankrate.com concluded that more than 50 percent of Americans are not invested in stocks in any way, shape or form. To say that this surprised me is an understatement.

It’s actually shocking to me that people aren’t buying individual stocks. Especially since it means they don’t own any mutual funds that contain equities, either within or outside of their retirement plans.

Returning to Basic Investing 101, stocks represent ownership in a company. As such, they can fluctuate up or down in value every business day. All business owners carry an element of risks, and since stocks represent ownership, they also carry risk.

But with risk there are potential benefits. Returns are never guaranteed, of course, but historically most stock market indexes perform fairly well over time. That’s one reason I believe every long-term investor should have a place for stocks in his or her portfolio. Of course, there are no assurances, but historically stocks have kept pace with rising costs.

For many households, their employer’s retirement savings program is the only real savings. If retirement is far into the future, it could be a mistake to totally ignore the equity markets. I understand that many households have a distrust of Wall Street and are still shell-shocked from the market meltdown.

Apparently this distrust of Wall Street carries over to financial advisers because the same bankrate.com survey determined that 21 percent of those surveyed didn’t trust stockbrokers or financial advisers. Naturally, this saddens me because in my world, the financial advisers that I interact with are of high quality, competent and caring.

History is no indication of the future, but investors who were scared away and sold their stock holdings during the recession of 2008-09 have missed out on sizeable market gains. To rub salt into the wound, if those dollars went into the bank, they produced very minimal interest gains over the past few years.

I’m not suggesting that every penny of your savings go into stocks. But not putting any dollars into something that has great growth potential makes you vulnerable to rising costs. Balance and diversification are the key words for most investors. I’m confident that most households can accomplish them.

If you’re in need of assistance, there are a number of excellent financial advisers who can help you through the maze of the investment world. There’s also the Internet, where you can find and research all kinds of financial data. The challenge with online research is sorting through the plethora of information.

Finally, don’t overlook personal observations from your daily activities. For example, if you notice everybody is eating at a certain restaurant chain, wearing the same clothing label, shopping at a certain store or driving the same brand car, do some research.

One of the most famous mutual fund managers of all time got some of the best ideas for his stock portfolio from his own personal observation.

I find it more than a little disappointing that half the investment world is choosing not to invest in equities. Owning anything is certain to have bumps in the road. But a bumpy road doesn’t mean it’s not drivable. Remember, with interest rates so low and life expectancies so long, totally ignoring stocks is a recipe for problems down any road.