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October 7, 2013

Families hoard cash 5 years after crisis

(Continued)

NEW YORK —

To better understand why people remain so cautious five years after the crisis, AP interviewed consumers around the world. A look at what they're thinking — and doing — with their money:

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Rick Stonecipher of Muncie, Ind., doesn't like stocks anymore, for the same reason that millions of investors have turned against them — the stock market crash that began in October 2008 and didn't end until the following March.

"My brokers said they were really safe, but they weren't," says Stonecipher, 59, a substitute school teacher.

Americans sold the most in the five years after the crisis — $521 billion, or 9 percent of their mutual fund holdings, according to Lipper. But investors in other countries sold a larger share of their holdings: Germans dumped 13 percent; Italians and French, more than 16 percent each.

The French are "not very oriented to risk," says Cyril Blesson, an economist at Pair Conseil, an investment consultancy in Paris. "Now, it's even worse."

It's gotten worse in China, Russia and the U.K., too.

Fu Lili, 31, a psychologist in Fu Xin, a city in northeastern China, says she made 20,000 yuan ($3,267) buying and selling stocks before the crisis, more than 10 times her monthly salary then. But she won't touch them now, because she's too scared.

In Moscow, Yuri Shcherbanin, 32, a manager for an oil company, says the crash proved stocks were dangerous and he should content himself with money in the bank.

In London, Pavlina Samson, 39, owner of a jewelry and clothes shop, says stocks are too "risky." What's also driving her away may be something that runs deeper: "People feel like they're being ripped off everywhere," she says.

Holzhausen, the Allianz economist, says the crisis taught people not to trust others with their money. "People want to get as much distance as possible from the financial system," he says.

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