Vanguard Study on Investors' Savings in IRAs

Close to one-third of investors who transferred their savings into Individual Retirement Accounts (IRAs) in 2015 retained their balances in cash for seven years without investing. This situation highlights a critical oversight, as many investors were unaware that their cash holdings did not automatically earn a high yield, but instead, often languished in low-interest brokerage sweep accounts. This trend illustrates a significant opportunity cost, as billions of dollars remained uninvested during a period characterized by strong market growth from 2015 to early 2022. The lack of engagement with their investments prevented these individuals from allowing their money to generate returns, emphasizing the importance of proactive financial management and education to maximize the potential of retirement savings.