The Boomers Did It

As we've mentioned before, one of the paradoxes of the current investing landscape is the, while the stock market has been strong lately, the amount of money flowing into domestic equity funds has continued to drop. Those funds lost about $150 billion in 2012. There's one overwhelming trend that may be largely responsible for this: the aging of the Baby Boomers.

We often hear that as we get older, our assets should move into safer instruments, and the Baby Boom generation has apparently taken this advice to heart. In 2011, according to data compiled by the Investment Company Institute, only 10 percent of households headed by someone aged 65 or older were willing to take above-average or substantial investment risk. Meanwhile, 19 percent of households headed by someone from 50 to 64, and 26 percent of those households headed by someone between the ages of 35 and 49,  were willing to take on that kind of risk.

We can see this show up in the types of assets in people's 401(k)s. In 2010, the most recent year for which the ICI has figures, only 38 percent of 401(k) participants in their sixties had more than three-fifths of their assets in those accounts invested in stocks, but that number rises to 70 percent of 401(k) participants in their forties. As the Baby Boomers continue to move from into their sixties, expect more of their assets to move from stocks to bonds.