Only 4% Of Jamaicans Investing In The Stock Market?! Here’s Who And Why

“The stock market is a sensible place to invest”. Most people will agree with that statement. It’s the place where anyone can own a part of any company and watch that investment grow (or sink)… really fast (or slow). In fact if I asked you, you’d probably tell me that you plan on investing there one day once you have enough funds, or once the time is right. So, the big question is, if you’re not the one investing in the stock market (or not yet), who are the persons investing there?

I started looking into this after reading a statement in an article about “Investing in shares” in the Jamaica Gleaner by Oran A Hall, where as a financial advisor he takes personal financial planning questions and responds to them. On the week of October 13, 2013 a Lisa, a young investor expressed her interest in the stock market, and this is how Oran Hall began his response to the young lady.

“Considering that so few Jamaicans invest in the stock market, about four per cent of the population, it is refreshing to see a young person taking an interest in investing in stocks.”.

I thought nothing about it at first, but then it got me thinking. 4%??! Just 4%??! How comes so low. So I became intrigued and began to look how that ratio compared internationally. This is what I found.

Could this be the reason, so few people invest in stocks? Photo Credit

Investing In the Stock Market Internationally

In the United States, a 2011 gallup poll found that 54% of Americans had stock market investments and that was the lowest since 1999! More recently a March 2013 Pew Research poll found a similar result – 45% of Americans had some stock market related investment. It has been difficult to find numbers on other countries. So what about our 4%? Is that figure even correct? Only time will tell. However if we use the 2011 census population figure of 2,697,983 and calculate 4% of the total, that approximates to 107,919 persons. Is that correct?

Who Invests On The Stock Market?

Based on US statistics (since I don’t have any from the Caribbean), what I’ve found, is that the richer, more educated, and the older you are, the more likely you are to invest in equities. Is there something that draws certain people to such investments and excludes others? Let’s look at the type of people who have stock market investments.

The March 2013 Pew Research survey found that for families in the Unites States earning less than US$30,000 or J$3,150,000* (the lowest end of the scale), only about 15% of those persons had money in the stock market, however as the family income went up to between US$30,000 and US$75,000 (J$3.2m to J$7.9m) 55% of households had investments in the stock market, and for those earning at the highest end of the spectrum over US$75,000 a year, a whopping 80% of those persons had investments in the stock market.

Another interesting area to note was education. At the lowest end of the spectrum, the people with the least education (high school or less), the survey found that only a quarter of those persons invested in the stock market, however once persons had some sort of college education a larger set of persons (now 45%) invested in the market and once persons graduated from college 77% of them invested in the market.

Could these be the reasons for why such a low percentage of our population is investing in the stock market? Is it that the wealthier and more educated persons are about 5% of the Jamaican population? Let’s look at Jamaica.

A Look At Jamaica

Remember as stated before, our population was estimated to be 2,697,983 in 2011 when the last major census that was done. Looking back at the data, we have an estimated 1,261,955 males of which the highest level of education for the majority of them was primary and secondary school (1,048,848 or 83%) which leaves the remaining 17%. Of that total, from what was reported, taking ‘University’ as the highest level only 3.5% of our males have university education, 7% if we include ‘Other Tertiary’. If we do the same thing for our females, we find that a higher number of women are educated at a highest level (6% at the university level, 166,527 or 13% including ‘Other tertiary’).

Looking at our population demographics and their highest level of education, without even taking earnings into consideration, I think it immediately begins to bring some credence to Oran Hall’s 4%. The fact is, once you consider those 254,758 persons** reported with tertiary or similar education and begin to realize that we haven’t even started adjusting (reducing) for interests, likes, dislikes, race+ and other factors, you will begin to realize that even 107,919 persons or 4% may seem like a hopeful number.

It would be good to get some statistics from the JSE/JCSD to confirm this, but in the meantime, what do you think about this 4%?

* @ J$105:US$1
**(88,231 males + 166,527 females)
+Race was also big in the US survey as 55% of Americans invested in stocks while only 28% of black persons did similar.