Stocks Rule, Younger Americans Have Been Abandoning Savings Bonds And CDs For 30 Years

February 22, 2021

There have been some very interesting actions on the investment front from Savings Bond, CDs, and Stocks, with young investors from Harlem to Hawaii leading the way.

Savings Bond

The U.S. savings bond program began in 1935, offering people a safe way to save money and fund the government.

By 1989, they were more popular with families younger than 35 than CDs or stocks, but their popularity plummeted over the next three decades.

Between 1989 and 2019, there was a 75.9% percent decrease in bond ownership among this group.

The biggest percentage change decreases came between 1998 and 2001 (17.1% to 12.7%) and 2007 and 2010 (13.7% to 10%).

It’s not just younger investors who have lost interest in bonds, though: The rate of savings bond ownership has declined significantly for families of all ages in the past 30 years.

In 1989, 23.9% of families owned savings bonds, versus just 7.5% in 2019. That represents a 68.6% decrease — slightly less than the 75.9% decrease in families younger than 35, but still significant.

Since 1989, there have been two upward shifts in bond ownership among families younger than 35:

  • 2001 to 2004
  • 2016 to 2019

Tumin said the 2001-to-2004 spike (12.7% ownership to 15.3%) may be attributed to Series I bonds, which were introduced in 1998 but took a few years to gain traction, as well as the Treasury Department’s 1999 introduction of an online storefront that allowed people to buy savings bonds using a credit card.

“This was a good deal, especially for those who used cashback credit cards,” Tumin said. “You could accrue credit card rewards as you built up your savings with I bonds.”

In 2002, the new TreasuryDirect system allowed people to buy paperless Series I savings bonds online. This made it easy to purchase, hold and redeem large amounts of I bonds in a way that was a similar inconvenience to online banks.

The most recent 2016-to-2019 increase in popularity among families younger than 35 was likely due to rising interest rates at the time, Tumin said, but that same spike wasn’t seen among families of all ages, with the rate of savings bond ownership falling from 8.6% to 7.5%.

Additional look: Another factor that likely discouraged savings bond ownership came in 2011, when the Treasury stopped offering paper savings bonds, except for tax refunds. “Many young people used to receive paper savings bonds as gifts from family members,” Tumin said. “The lack of paper savings bonds mostly ended savings bond gift-giving.”


CDs have been a less popular choice for families younger than 35 when compared to bonds and stocks, and the rate of ownership declined significantly over the past three decades.

Between 1989 and 2019, there was a 61.4% ownership decline, which is nearly the same decline in ownership by families of all ages during that time period.

There were, however, a few periods when the percentage of families younger than 35 owning CDs increased:

  • 1998 to 2001: 6.2% to 6.3%
  • 2004 to 2007: 5.6% to 6.7%
  • 2016 to 2019: 2.4% to 3.4%

Tumin said the most recent increase is likely due to rate hikes.

We started to see significant CD rate increases in 2017 as the Fed was well into a series of rate hikes, Tumin said. The demand for CDs rises as rates rise.


Direct ownership of stocks, on the other hand, has increased among younger Americans in the past three decades. In 1989, 10.9% of families younger than 35 owned stocks. That number rose to 13.8% in 2019, a 26.4% increase.

Between 1989 and 2019, there were some significant increases in stock ownership among young Americans:

  • Between 1998 and 2001, the percentages of families that directly owned stock rose from 13.1% to 17.4%.
  • A more recent increase was seen between 2016 and 2019 when the percentage of ownership rose from 10% to 13.8%.

In general, direct ownership of stock among families of all ages has actually declined. In 1989, 16.9% of families owned direct stock, while that number dipped to 15.2% in 2019 — a 10.1% decline.

That number hit a high of 21.3% in 2001, then plummeted until 2013, when it started to climb back up again.

Tumin attributes the rise and fall of stock popularity to a couple of factors. He said 2001 was at the end of the dot-com bubble, a time when many people were attracted to stocks.

Then, more recently, between 2016 and 2019, it was generally a bull market for stocks, which encourages stock ownership, and the rise of new digital brokerages with low and zero trading fees became popular, which likely contributed to more people buying stocks.

Median stock balances have taken the biggest hit — nearly 57% — among assets since 1989

While stocks have been the chosen one when it comes to investments among younger families, that doesn’t mean that those who are buying it are buying larger amounts of stock than their counterparts did 30 years ago.

In fact, the median stock balance for families younger than 35 decreased 56.7% between 1989 and 2019.

Here’s a closer look at the specifics:

CHART: Median asset balance for families younger than 35

5 investment ideas for young Americans

Starting to invest at an early age is one of the best ways to build long-term wealth, and today there are more tools than ever to help young investors get the greatest payoffs down the line.

Here are five things young investors should consider

  • Participating in an employer’s matching retirement plan: If you work for a company that will match your contribution up to a certain amount in a retirement plan, such as a 401(k), make sure you put in at least that much. Not doing so is throwing money away, money that could grow exponentially over the years before you retire with the magic of compound interest.
  • Automating investments: The best intentions don’t earn compound interest. Consider a micro-investing app that automatically invests your “spare change” when you make purchases. For example, if you purchase $20.25 worth of gas, the purchase would be rounded up to $21, with 75 cents sent to your investment account. Chances are, you’ll never miss that change, but it can add up quickly.
  • Considering a Robo-advisor: If you’re just getting started with investing, you may want to consider a robo-advisor. These advisors often work via algorithms to help clients invest money, typically in exchange-traded funds (ETFs). They’re generally less expensive than traditional financial advisors, and there’s often no minimum balance, so you don’t have to have a lot saved to get started.
  • Evaluating online advisors: If you want a little more input into choosing your investments, you may want to consider an online broker. They typically offer an array of educational and investment tools and are less costly than traditional advisors.
  • Planning for emergencies: Nothing can thwart your financial goals faster than having to take on unexpected debt. So if you don’t already have one, make sure you have an emergency fund kept somewhere that you can easily access, likes a high-yield savings account. Most experts suggest having at least three to six months’ worth of living expenses saved.


MagnifyMoney researchers analyzed the Federal Reserve’s 2019 Survey of Consumer Finances — the latest available — to determine the percentage of families younger than 35 who hold CDs, stocks and savings bonds, as well as the median value of these assets.

For a more hands-on approach, investors can seek advice from qualified financial advisors who can provide guidance on choosing the right investments for your goals. You’ll typically pay a fee for such services and have a minimum investment requirement. Another option is to utilize robo-advisors which provide investors with automated, algorithm-based solutions to help build and manage financial portfolios. As with human financial advisors, a percentage of managed assets go toward fees, but robo-advisors generally require lower minimum investments and come with lower fees. Additionally, investment tools such as Stash and Robinhood can help investors build a diversified portfolio through the purchasing of fractional shares with no or low introductory fees and investment commitments.” ~ Ismat Mangla, Content Director, LendingTree

Stocks within this study represent direct ownership of publicly traded stock. Indirect stock holdings, which can contain stock held in retirement accounts, were excluded.

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