How Does the Stock Market Affect You?Sep 22 2011
Many believe that if you don’t invest in the stock market, a stock market crash doesn’t affect you. However, any average person loses money and opportunities all based off the stock market. If you’re not sure how, here are a few examples, given by 24/7 Wall St., of how it can affect people’s lives.
Cuts on employee benefits: When the stock market begins to fluctuate and head south, companies tend to react by pulling back on their employees’ retirement, healthy care and dental plans.
Deferred retirement: Money becomes tight when the economy is unstable, deterring people from saving. This includes their 401(k), either they stop putting anything in it all together or they begin taking funds out prematurely to help with daily expenses.
Home Sales: As we’ve stated before, the home market is directly tied with the stock market. 20% of U.S. home loans are underwater due to the stock market and economy. To sell these homes, owners must come up with the difference between what they can sell the house for and what they still owe the bank – sometimes ranging over $10,000.
Home Purchases: Adding to the issue with home sales, purchasing a house is very difficult in times of financial turmoil. Banks tighten their lending standards, making it very hard to get a mortgage.
Deferred education: Similar to the deferred retirement, when money gets tight, people stop saving and this includes their children’s education savings.
Unemployment: Businesses feel the effects of a market collapse fairly quick. Since most companies keep their money mixed in equities, a rapid drop can dissolve their assets. To make up for these, companies turn to their expenditures, including payroll. Companies lay off employees to try to stay afloat.