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How Americans Make and Spend Their Money, by Education Level

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Months ago, we showed you a set of data visualizations that highlighted how people make and spend their money based on income groups.

Today’s post follows a similar theme, and it visualizes differences based on education levels.

Below, we’ll tackle the breakdowns of several educational groupings, ranging from high school dropouts to those in the highest education bracket, which is defined as having achieved a master’s, professional, or doctorate degree.

Income and Spending, by Education

The data visualizations in today’s post come to us from Engaging Data and they use Sankey diagrams to display data from the Bureau of Labor Statistics (BLS) that shows income and expenditure differences between varying levels of education in America.

The four charts below will show data from the following categories:

  1. Less than high school graduate
  2. High school graduate
  3. Bachelor’s degree
  4. Master’s, professional, or doctorate degree
    1. It should be noted that the educational level listed pertains to the person the BLS defines as the primary household member. Further, people in households can be at different ages and at different stages in their career – for example, someone with a Master’s degree could be 72 years old and collecting pension payments, and this impacts the data.

      Less than High School Graduate – $28,245 in spending (98.5% of total income)

      These contain an average of 2.2 people (0.7 income earners, 0.6 children, and 0.5 seniors)
      Less than High School Graduate

      The average household in this category brings in $17,979 of salary income, as well as an additional $7,503 from social security programs.

      Almost all money (98.5%) is spent, and on average these households are actually pulling money from savings (or taking out loans) to make ends meet. The biggest expenditure categories include: housing (23.5%), foot at home (12.3%), household expenses (8.4%), and gas/insurance (8.2%).

      High School Graduate – $35,036 in spending (87.3% of total income)

      These contain an average of 2.3 people (1.0 income earners, 0.6 children, and 0.4 seniors)
      High School Graduate

      The average household here brings in $29,330 of salary, as well as $9,008 from social security.

      These households spend 87.3% of their income, while putting $3,113 (7.8%) away in savings each year. The biggest expenditure categories include housing (21.7% of spending), food at home (10.1%), gas/insurance (10.0%), and vehicles (7.7%).

      Bachelor’s Degree – $63,373 in spending (68.6% of total income)

      These contain an average of 2.5 people (1.5 income earners, 0.6 children, and 0.4 seniors)
      Bachelor's Degree

      Households with at least one person with a Bachelor’s degree earn $81,629 per year in salary, as well as nearly $11,000 stemming from a combination of social security, dividends, property, and other income.

      Roughly 68.6% of income is spent, with 16.6% going to savings. Top expenditures include housing (22.4%), gas/insurance (8.8%), household expenses (7.9%), and food at home (7.6%).

      Graduate Degree – $83,593 in spending (62.9% of total income)

      These contain an average of 2.6 people (1.5 income earners, 0.6 children, and 0.4 seniors)
      Graduate Degree

      Finally, in the most educated category available, the average amount of salary coming into households is $116,018, with roughly an additional $17,000 coming in from other sources such as social security, dividends, property, and other income.

      Here, 62.9% of income gets spent, and 17.3% gets put towards savings. The most significant expenditure categories are housing (23.3%), household expenses (8.4%), gas and insurance (7.2%), and food at home (6.9%).

      A Changing Role for Education?

      For now, there is a clear link between certain types of college degrees and higher salaries.

      However, as total student debt continues to hit record highs of $1.5 trillion and as more remote educational options proliferate online, it will be interesting to see how these charts are impacted in the coming years.

      By the year 2030, do you think education will still have the same strength of correlation with income levels?

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Markets

Uncovering Income: Dividend Stocks With Strong Yields

Some companies are cutting or suspending dividends. Which dividend stocks can investors consider for stable distributions and strong yields?

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Dividend Stocks

Uncovering Income: Dividend Stocks with Strong Yields

Amid the current market volatility, attractive income-generating investments can be hard to find.

Treasury bond yields hover near record lows, and U.S. companies face restrictions on issuing dividends if they accept COVID-19 stimulus funds. Moreover, Goldman Sachs estimates dividends for S&P 500 stocks will decline by 25% this year.

Which stocks can investors turn to for stable distributions and relatively high dividend yields? Today’s visualization shows 35 stocks that may meet this criteria, leveraging Goldman Sachs data as published by Forbes.

The Dividend Stocks to Watch

To compile the list, Goldman Sachs identified stocks from the Russell 1000 index that met a number of requirements:

  • A minimum annualized dividend yield of 3%
  • An S&P credit rating of at least BBB+
  • Ample cash on hand
  • Strong balance sheets
  • ”Reasonable” payout ratios
  • At least average performance since the market peak

Dividend yields, which measure dividend income in relation to the share price, were initially calculated March 27. We have updated them as of market close on April 8. Here’s the full breakdown, sorted from highest to lowest dividend yield:

RankCompanyTickerAnnual Dividend YieldSector
1CenterPoint Energy, Inc.NYSE: CNP6.90%Utilities
2Wells Fargo & CompanyNYSE: WFC6.74%Financials
3People's United Financial, Inc.NASDAQGS: PBCT6.34%Financials
4Franklin Resources, Inc.NYSE: BEN6.28%Financials
5Regency CentersNASDAQGS: REG5.82%Real estate
6Truist FinancialNYSE: TFC5.50%Financials
7International Business MachinesNYSE: IBM5.43%Tech
8Omnicom Group Inc.NYSE: OMC4.76%Communication services
9U.S. BancorpNYSE: USB4.71%Financials
10Raytheon Technologies (merger of Raytheon and United Tech.)NYSE: RTX4.69%Industrials
11NetApp, Inc.NASDAQGS: NTAP4.69%Information Technology
12The PNC Financial Services Group, Inc.NYSE: PNC4.62%Financials
13Eaton Vance Corp.NYSE: EV4.34%Financials
14Nucor CorporationNYSE: NUE4.12%Materials
15United Parcel Service, Inc.NYSE: UPS4.09%Industrials
16M&T Bank CorporationNYSE: MTB4.09%Financials
17Exelon CorporationNASDAQGS: EXC4.07%Utilities
18Archer-Daniels-Midland CompanyNYSE: ADM3.95%Consumer staples
193M Company NYSE: MMM3.95%Industrials
20Emerson Electric Co.NYSE: EMR3.84%Industrials
21Sysco Corp.NYSE: SYY3.81%Consumer staples
22Mid-America Apartment CommunitiesNYSE: MAA3.61%Real Estate
23Essex Property Trust, Inc.NYSE: ESS3.55%Real Estate
24MDU Resources GroupNYSE: MDU3.53%Utilities
25Cummins Inc.NYSE: CMI3.51%Industrials
26Sonoco Products Co.NYSE: SON3.50%Materials
27Cisco Systems, Inc.NASDAQGS: CSCO3.45%Information Technology
28American Electric Power Company, Inc.NYSE: AEP3.36%Utilities
29The Hartford Financial Services Group, Inc.NYSE: HIG3.36%Financials
30NiSource Inc.NYSE: NI3.30%Utilities
31Caterpillar Inc.NYSE: CAT3.23%Industrials
32Everest Re Group, Ltd.NYSE: RE3.13%Financials
33Bristol-Myers Squibb CompanyNYSE: BMY3.09%Health care, pharmaceuticals
34The Home Depot, Inc.NYSE: HD3.08%Consumer discretionary
35Bank of America CorporationNYSE: BAC3.07%Financials

Note: From the original list, 5 stocks have been excluded as they no longer meet the 3% annualized yield threshold.

Centerpoint Energy, an electric and natural gas utility company, is at the top of the list. Since utility stocks are generally considered to be recession-resistant, investors may benefit from both the company’s yield and its defensive qualities.

Financials are the most-represented sector, with 11 companies on the list. Although regulators have pressured European banks to suspend dividend payments, U.S. banks will likely be able to continue their distributions. Top banking executives have argued they have sufficient capital to weather the COVID-19 crisis, and that halting payments would be “destabilizing to investors.”

There are also a number of well-known names on the list, including Home Depot, IBM, and 3M. The latter is the largest maker of respirator masks worldwide, and has been providing critical supplies to the U.S., Canada, and Latin America.

Caution: Volatility Ahead

As the pandemic’s financial impact continues, it’s likely many companies will delay or suspend their dividends. To avoid falling into “yield traps”—a trap in which an attractive yield could be due to a fundamental business problem—investors can screen for the qualities laid out above.

A strong balance sheet, good credit rating, and average or better performance since the downturn can all help point towards stability.

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Investor Education

Bridging the Gap: Wealth Isn’t Just for the Wealthy

The UK has a financial adviser gap, leaving about 51 million adults without advice. Learn how wealthtech makes investing accessible for everyone.

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wealthtech

In the UK, money is the #1 cause of stress—ranking above physical health, work, or family.

When people begin investing, they see immediate emotional benefits compared to non-investors. In fact, investors are 16 percentage points happier, and 23 percentage points more positive about their well-being.

However, only 37% of Brits hold market-based investments. So why aren’t more people taking steps to invest? Today’s infographic from BlackRock outlines the barriers people face, and how wealthtech can help address these issues at scale.

wealthtech

The Wealth Problem

A variety of hurdles keep people from taking control of their finances.

  1. Lack of Resources: 59% of Brits feel they don’t have enough money to invest.
  2. Lack of Knowledge: 39% say a lack of knowledge holds them back.
  3. Fear of Failure: 34% are afraid of losing everything if they invest.

All of these factors culminate in insufficient investing. In fact, 50% of the €26 trillion European wealth market is currently in uninvested cash, earning zero interest.

What’s the Current Solution?

Traditionally, investment advisers helped tackle these issues. However, investors have faced challenges accessing professional advice in recent years.

A shortage of UK advisers is a main contributing factor:

  • There are only 26,700 advisers, who can service an average of 100 clients each.
  • This leaves over 51 million adults without professional advice.

Among available advisers, many impose investment minimums or fees that create barriers for lower-income populations. Financial advisers charge an average of £150/hour, and half of all surveyed advisers turned away clients with less than £50,000 to invest.

With so many hurdles to overcome, how can Brits take charge of their investments?

A Modern Solution

Wealth technology—or simply wealthtech—helps address these issues at scale, offering four main digital-first solutions:

  1. Helps investors build better portfolios.
    Gone are the days of rudimentary spreadsheets. With the help of algorithms and machine learning, investors can now automatically build sophisticated portfolios.
  2. Helps advisors scale their services.
    The automation of time-consuming processes allows advisers to service more clients.
  3. Reaches more people.
    Wealthtech is accessible for all, not just the wealthy. For example, micro-investing apps allow investors to make small, regular contributions without paying a commission.
  4. Modernises infrastructure.
    Wealthtech updates old legacy systems with more streamlined, automated systems. As a result, paper-based processes are replaced with mobile transactions that can be done with the click of a button.

These benefits can be applied across various branches of wealth management.

The Wealthtech Ecosystem

Investors can choose one of three main paths, based on their level of knowledge and interest.

“Do It Yourself” Investing
Confident investors who enjoy managing their own money can trade securities through self-directed online platforms.

“Do It For Me” Investing
Novice investors can use platforms that execute trades on their behalf, such as micro-investing or robo-advisers.

“Do It With Me” Investing
For investors in the middle of this spectrum, certain platforms offer a hybrid of digital transactions and professional advice.

With a wide variety of solutions available, investing has never been easier.

Inclusive Wealth-Building

It’s clear Brits are open to the shift: 64% say new technology would help them be more involved in their investments.

As wealthtech evolves, it will be seamlessly integrated into daily life as part of a holistic financial services offering. Traditional barriers will be broken down, empowering individuals to take charge of their financial future.

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