A significant number of Americans claim they never invest. And yet, an amount is deducted from their paycheck every week or two contributing to a retirement plan. Older generations (parents) claim the market is too risky and yet they receive a monthly distribution from their public (or private) employees retirement system that they paid into.
Many retirement plan participants have a deficient understanding of how their retirement plans work and a significant number don’t even realize their contributions have been invested.
How does a 401(k) plan work? 63% of Americans say they don’t know according to a 2019 survey.
Are you contributing to a 401(k) or similar plan? 59% of those who weren’t contributing mistakenly believed they were contributing according to a 2024 Principal Financial Group survey.
Retirement plans are a company/workplace benefit and are often viewed as such and can be overlooked by employees. Some employees are automatically enrolled and view it more as a “tax” while others opt out of it or forgo enrolling at all. It becomes even more challenging as people shift from working for an employer to working for themselves where the onus is on them to understand, set-up and contribute to a retirement plan.
The gradual and long-term nature of retirement investing isn’t rewarding in the short-term. You have nothing to show for it. You receive no feedback or validation for your effort and hard work of saving. Investing is difficult to understand when the benefit or reward is perceived and not tangible.
I was an uninformed investor and only over the last several years have become an informed one. Even industry experts had to learn and earn their expertise. It’s not something you are inherently born with like the ability to walk.
To understand investing, AI suggests that you identify your goals, assess your risk tolerance, build a financial foundation and then learn the basics of how stocks work. This is what you should do but if you have no interest in doing this and would rather read the recently released murder-mystery novel or catch-up on the latest binge-worthy show, it’s not going to happen.
Alternatively, let’s take a different approach starting with the financial securities known as stocks and bonds, the foundation of how most investment funds are built. Since the majority of funds are comprised of a greater quantity of stocks, our focus will begin with these.
We could look at the hottest stocks right now but not everyone can directly relate to those. Instead, I chose a stock from a company that everyone should know. It has been part of the American landscape for over 100 years. We all have used some type of phone in our life whether it be a landline phone, cell phone or smartphone.
In 1876, Alexander Graham Bell invented the telephone. A year later Bell formed the Bell Telephone Company. In 1885, the American Telephone and Telegraph Company (AT&T) was established to build and operate the first long-distance telephone network, laying the foundation for a company that would become one of the most recognized companies in the USA. In the late 1990’s, it was one of the most valuable companies in the world.
AT&T became a publicly traded company on July 19, 1984. A publicly traded company or publicly held or public company is a corporation whose ownership is distributed among general public shareholders through the trading of its stock shares on stock exchanges or over-the-counter markets.
Stocks are commonly known as equity securities that represent partial ownership in a company. When an investor purchases equity securities, they acquire a share of the company and may receive dividends, which are distributions of the company’s profits. The value of these securities can fluctuate based on the company’s performance and market conditions.
Key characteristics of a public company:
• Public ownership: Anyone can buy shares of stock in a public company, making the ownership widely held.
• Stock trading: Shares are bought and sold on stock exchanges like the New York Stock Exchange (NYSE) or NASDAQ or over-the-counter markets.
• Regulatory requirements: Public companies are required by law to file regulatory reports with the SEC (Securities and Exchange Commission) detailing their financial performance and other business information.
• Transparency: These disclosures make information about the company’s finances, performance and governance accessible to the public and investors.
• Ticker symbol: Each publicly traded company has a unique ticker symbol, which is a short abbreviation used for trading its stock. AT&T’s ticker symbol is T and is traded on the NYSE.
• Capital raising: Going public provides companies with a way to raise capital funds by selling stock to the public.
A couple of other 100-year companies that are still in existence and headquartered in Atlanta: Delta Airlines NYSE: DAL and Coca-Cola NYSE: KO
Featured Image: The AT&T Tower alongside The Bank of America Plaza in midtown Atlanta. My first real job out of college was on the 36th floor of The Bank of America Plaza known back then as the NationsBank Plaza. AT&T no longer occupies that tower.
Why don’t nearly half of Americans have any investments? – InvestmentNews
History of AT&T Brands | AT&T Intellectual Property