It is interesting to track how the equity allocation trend is changing in US with the underlying changes in demographics. Although last year’s economic crisis (It feels nice to say that in retrospection!) would have pushed households to move away from equities the longer term demographic trends will have even bigger impact.

The charts show that US households have allocated about 30% of their $39tn wealth to equities. At younger age (below <30 years) the allocation to equities is more but they also have lesser surplus income. After retirement age the surplus income is more but the allocation to equities will be less as there is less risk seeking behavior. The sweet spot in age for equities seem to be from 30+ years up until retirement age.

If the trends converge towards the longer term US average of 35% then there will be an additional $2tn assets moving into US equities in near future. Does it feel right time to be in stocks?