Last year, the S&P 500 roared ahead 32%, including dividends, and while small investors should think about pulling back, the Wall Street Journal reports that in March, stocks accounted for 67% of employees’ new contributions to retirement portfolios, the highest since March of 2008.
So while the Dow is hitting all-time highs, retirement savers have their largest exposure to stocks in more than six years. In March, stocks made up 66% of the assets in the 401ks surveyed by Aon Hewitt, a company that tracks retirement accounts for over a million people at large corporations. That percentage is up considerably, from 48% in February 2009.
Many conservative investors regret earning nothing on their bond portfolios over the last five years, and now they’re piling in to make up lost ground. But keep in mind that when the stock market peaked the last time, in October 2007, investors put 69% of new 401k contributions into stocks—just in time for a catastrophe. The S&P 500 went on to lose 57% of its value by March 2009.
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