The COVID-19 pandemic has further widened the gap between the wealthiest and the lower middle class as the new data shows around 10% of Americans own almost 90% of the US stock. According to the latest data from the Federal Reserve, the top 1%, who are investing in the US stock market for the last 4-5 decades, has gained more than $6.5 trillion when the whole world has been reeling under the deadly COVID virus. The data shows the top 1% gained a handsome wealth while investing in corporate equities and mutual funds.
It also highlighted the bottom 90% account for the addition of $1.2 trillion of wealth. According to the data, the share of corporate assets and mutual funds owned by the top 10% reached a record high in the second quarter. Whereas, the rest of Americans own about 11% of individually held stocks. Notably, before the COVID-19 pandemic, the individual held stock account for 12%. As the COVID-19 forced Americans to breathe under one roof, investment in the stock market has become the favourite destination to earn money for a majority of the American population.
According to the Federal Reserve data, investment in the stock market has almost doubled since the pandemic hit the United States in March last year. It said the stock market witnessed a surge of 40% since January 2020. During the pandemic, the total wealth of the top 1% of people increased to 32% of which 70% of their wealth grew only in the past year. The Federal Reserve called the jump one of the fastest wealth inflations in the recent past.
"The top 1% own a lot of stock, the rest of us own a little," CNBC quoted Steven Rosenthal, senior fellow, Urban-Brookings Tax Policy Center, as saying during an interview.
According to the data, millions of new investors joined the stock market for the first time during the pandemic. Robinhood -- an American financial services company, known for pioneering commission-free trades of stocks, exchange-traded funds and cryptocurrencies-- added more than 10 million new accounts over the past two years. Now the company has reached a milestone of 22 million investors, of which the majority of them are young investors.