Should individuals with low net wealth actively participate in the financial market?

Traditionally the financial market is the playground of high net wealth individuals. However, I have a different opinion about whether those from less wealthy backgrounds should participate in financial market activities or not. I think that people from less wealthy background should definitely participate in financial market activities, and this is not just going to benefit these individuals, but also going to be socially desirable.

The existence of the social wealth gap is not only caused by the income differences, but more importantly caused by their different levels of investment returns in the financial market. Over the past several years, the average income of the middle classes in America has not increased significantly; however, the wealth gap is keeping widening and the record for the wealth of the richest man has been higher and higher. Here comes a question how to close the gap between the investment returns of the wealthy and the less wealthy.

However, when people from disadvantageous backgrounds enter the financial market, they are very likely to be in a weak position, as they do not have sufficient abilities and resources to match the strength of the wealthy investors. This means if they enter the financial market without any external support or help, they are very likely to lose more to the wealthy classes and the wealth gap could be even widened. Therefore, investors should participate in the financial market collaterally and they should have help from professionals. In addition, if the government is able to control individuals’ pensions, the government could invest the pension funds and then distribute pensions progressively that less wealthy pensioners could receive a higher return rate and wealthier pensioners could receive a lower return rate, this can help to redistribute the wealth among the retired population and narrow the wealth gap.

To conclude, individuals with disadvantageous backgrounds should join the financial market activities, this is important to close the wealth gap. However, because of their backgrounds (including abilities and resources), they should be given additional support and their investment should be conducted collaterally by professional experts.