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CD Ownership Has Declined at Almost Same Rate That Stock Ownership Has Increased

Written by Devon Delfino | Published on 3/16/2021


Certificate of deposit (CDs) ownership has steadily declined since 1989, while stock ownership has substantially increased in the same period.

But what’s driving these trends? Lower CD rates and stock trading apps played a role, according to DepositAccounts founder Ken Tumin.

In the latest DepositAccounts study, researchers further explored CD and stock ownership, looking at historical data and trends. Here’s what we found.

In this article we will cover:

Key findings

  • The percentage of households with CDs decreased by 60% between 1989 and 2019, while the percentage of households with stocks increased 66% in the same period.
  • While average CD balances rose 55% in that period from 1989 to 2019, average stock holdings spiked 212%.
  • Strong market performance may be a catalyst for the increased ownership in stocks compared to CDs. The S&P 500 had an average return of 11.81% between 2010 and 2019, while 6-month CD yields dropped from 0.47% in 2010 to 0.38% in 2019.

CD ownership vs. stock ownership: How outlooks have changed since 1989

First, our researchers looked at the percentage of households with CDs or stocks and average account balances.

Stock ownership on the rise, but it’s the opposite for CD ownership

The percentage of households holding stocks increased from 49% in 2013 to 53% in 2019. However, the percentage of households holding CDs remained flat in that 2013-to-2019 period at 8%.

While the same percentage of households had stocks in 2019 than did in 2007, the percentage with CDs dropped 50% in that same period. CDs remain less popular among consumers than stocks by an increasingly wide margin.

“One thing that has made CDs less appealing in the last 20 years is the fact that interest rates have generally been falling during this time,” said Ken Tumin, DepositAccounts’ founder. “Also, it’s easier to invest in stock and stock mutual funds than in CDs inside retirement accounts.”

Both stocks and CDs saw a decrease in holdings between 2007 — mainly before the Great Recession — and 2010, after the recession had ended. While that trend continued into 2013 for both account types, stocks seemed to rebound by 2016 while CD holdings continued to decline.

Stock holdings jump 212% while CD balances rise 55%

Here’s how stock and CD account balances have played out since 1989:

Despite the overall decline in CD ownership over time, balances for these accounts have still increased, beginning at $66,000 in 1989 and topping out at $102,000 by 2019. The Great Recession seemed to have a positive impact here, with balances seeing an increase from 2007 to 2010. Meanwhile, stock balances decreased during that time.

After a significant increase in stock balances from 2013 to 2016, growth slowed in 2019. This could have something to do with interest rates, Tumin said.

“A low-interest rate environment is generally helpful to demand in stocks,” Tumin said. “The Federal Reserve increased its benchmark rate seven times in 2017 and 2018. That may have discouraged growth in stock holdings.”

Average S&P return was 11.81% from 2010 to 2019, but stock ownership only rose from 50% to 53% in same period

Though our look here doesn’t extend back to 1989, stock returns don’t always align with changes in stock ownership:

Stocks can be something of a gamble, and when you look at the S&P 500 returns over time, you’ll see that play out. For example, returns spiked in 2013 at almost 30%, only to go below 0% in 2015 and 2018 — so it requires a long-term perspective.

But people — particularly those who haven’t yet delved into the world of stocks — may not be in a position to fully capitalize on the more advantageous returns, perhaps because of the risk involved.

For example, stock ownership only rose three percentage points from 2010 to 2019, even though S&P returns neared 12% during that time. And stock holdings even dropped between 2010 and 2013, when the S&P return averaged nearly 14%. Conversely, stock account balances saw a significant increase during that three-year period, rising by $44,000.

So although those who hadn’t previously been stock investors weren’t willing to take that leap, even in fair-weather times, those who had already invested were willing to double down to take advantage of those high returns.

Deciding between stock ownership or CD ownership

CDs and stocks are very different investment tools, and they aren’t going to be right for every person. Stocks are generally more of a risk and can require patience to ride out market lows. But they can also lead to higher rates of return than you would find with CDs. On the other hand, CDs are a safe way to earn a solid amount on your savings, as long as you’re willing to stash the cash for six months to a year (or even longer).

“Over the long term, an investment in a well-diversified group of stocks is more likely to provide a return that exceeds inflation than an investment in CDs,” Tumin said. “On the other hand, stocks have much more risk, and that can make CDs more appropriate for short-term goals. Also, CDs can be useful to include along with bonds and bond funds to lower the overall risk to an investor’s portfolio.”

Ultimately, the decision between the two will depend on your financial goals, the state of your finances and your level of comfort when it comes to risk. And it doesn’t have to be a strict “this-or-that” scenario — both can contribute to a healthy, lucrative financial portfolio. Talking to a certified financial planner is a great place to start.


DepositAccounts researchers analyzed data from the Federal Reserve’s 2019 Survey of Consumer Finances — the latest available data — to determine the percentage of households who hold CDs and stocks, as well as the average value of these assets per household.

Stock holdings are defined as direct and indirect holdings of publicly traded stock. Indirect stock holdings can contain stock held in retirement accounts.

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