Monday, November 24, 2025
For better or worse, Americans’ financial futures are tied to stocks.
Following the financial crisis, U.S. households held over half their financial assets in equities. Today, that amount has risen above 80%, which is higher than it was at the peak of the dot-com bubble.
That means the average American’s financial health has never been more dependent on stocks.
And with each retirement contribution, a little more of every paycheck flows to the “Magnificent 7” stocks. On average, American workers contribute approximately $8,500 per year to their 401(k) accounts. Of that, 71% is allocated to equities.
The “Mag 7” stocks now represent almost 40% of the S&P 500’s market capitalization. This means that more than $2,300 annually (28% of all new 401(k) equity contributions) flows into shares of Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla.
In essence, these stocks have become the core holdings of American nest eggs. This underscores the increasing concentration of market returns in a shrinking group of companies.
So, not only are people tied to stocks, but a lot of it is going into just seven companies. If those companies decline, it could have an outsized effect on the average American’s financial life. This is the danger of high concentration and shows the strength of investment diversification (or not putting all your eggs in one basket).