Millennials, or those born between 1980 and 2000, are now the largest generation in the US, and as such, they make up a significant portion of today’s workforce. At the same time, there are many misconceptions about this group of people, including that they don’t stick around, they are slackers, they only want to work at big companies and so on.
Of course, this is not true. Millennials are not some reckless job hoppers with no plans. In fact, a number of new studies indicate that Millennials are doing a great job stashing money for the future. But some of these studies also show that Millennials are very cautious when it comes to investing money.
Here are some facts about Millennials and money; 71% of Millennials are saving for retirement, either with their salary or outside work. According to a survey, the median age at which they start saving is 24, which is younger than Generation X’s median starting age 30. Around 39% of Millennials are saving more than 10% of their salary, which is close to the 15% experts recommend. Finally, about one in six Millennials have saved $100,000 or more, which is really great news.
Unfortunately, the statistics related to investments are not as good. A whopping percentage of Millennials (around 70%) says investing in the stock market is scary. Jordan Kahn, Chief Investment Officer at HCR Wealth Advisors, explained the reasons behind this fear and ways to successfully overcome it in order to help secure a better future.
Millennial View on Investing
A lot of Millennials are still wary of investing money because of the recession in 2008 and the terrible impact it had on their families. It’s, therefore, no surprise that people who came of age during the recession hesitate to embrace the stock market. Unlike the generations before them, Millennials still suffer from a certain mental toll that the market had on their households.
However, as Kahn explained that “it is ironic that there is this major barrier to making investments for millennials when there are more investment options than ever. These options include robo advisors, financial advisors (always available at HCR), apps… We live in an era when we can make an investment from a cellphone.”
Millennial View on Life
Saying that Millennials are better or worse than any other generation would be a mistake because we’re all shaped by the times we live in; there are no winners or losers. There are, however, certain differences in the way different generations see life. For example, Millennials are happy to live on one-year leases as they tend to be more flexible.
According to Kahn, Millennials are not much different than the generation before them as they still want marriage and kids. However, they don’t think it needs to happen so fast. In other words, they have their goals and milestones, they just don’t think it all needs to happen at the same time it happened to other generations. This might be because Millennials are more independent and focused on personal goals, Jordan explained.
While this flexibility can be a good thing as it gives Millennials more freedom to chase their dreams, Kahn warns about the problem of hitting the age of having money, and many Millennials are already at this age. “At HCR, we’re realizing as some of our clients are aging, they are starting to transfer money to children in younger generations,” Kahn said.
At this point, education is the key. At HCR, transparency and understanding the pros and cons of investing are crucial when it comes to bringing this financial strategy closer to Millennials. Jordan also suggests that Millennials sit down and figure out what they want their retirement to look like before making any moves. Once they visualize it, they need to ask themselves a question: How do I get there?
The part of the education is also following reliable sources such as CNBC, The Vanguard Group, and Charles Schwab. As Kahn suggests, these sources are putting out a lot of content that is easily digestible and they are doing a good job of keeping it simple and readable.
Industry is Changing
According to Jordan Kahn, the industry is changing to attract younger people. “Industry is turning more into ‘let me help you manage the financial touchpoints in your life’ and not just ‘manage your money’,” Kahn said.
Another obstacle when it comes to attracting more Millennials to invest their money securely is the so-called “I want it now” mentality. And a major mistake Millennials are making nowadays is chasing fads, such as cryptocurrencies or cannabis stocks. Kahn explained that these are common “get rich quick” options that Millennials should be aware of before investing their money just because they believe in them.
Speaking of beliefs, Millennials are also a special group of people because they tend to make socially responsible investments that mirror their values in life. These investments include environmental factors and the ones that care about the world and pollution. On the other hand, Millennials tend to avoid gun stocks and businesses that harm animals.
Finally, Jordan’s advice to Millennials is to educate themselves, start making investments sooner than later and think of it the same way they do like expenses such as Netflix, Hulu, phone or cable because investing can make a big difference in their futures.
Learn more about HCR Wealth Advisors: https://www.crunchbase.com/organization/hcr-wealth-advisors
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The content presented here is for informational purposs only and should not be considered investment advice.