Millennials are frequently criticized for their lack of financial stability, although such criticism is, for the most part, undeserved. Not only did this generation come of age during a crushing financial crisis, they are also weighed down by more student loan debt than any other generation has ever had.
They’re not the lazy, entitled generation that so many paint them to be. They’ve experienced challenges unlike any other generation has had to endure, and they’re proving their resilience in overcoming these tremendous challenges, even though it has meant making sacrifices like foregoing buying cars and homes and delaying moving out of mom and dad’s house.
However, one area that Millennials admittedly need some improvement financially is in investing. Given the financial challenges that Millennials face, many of them simply aren’t investing at all: 80% aren’t invested in the stock market, according to a recent Harris poll. Many of the respondents in the survey (41%) reported that they’re not investing because they don’t have enough money. However, misconceptions about how much they’d need to get started might be the actual problem: 38% thought you need at least $1,000, although the more accurate minimum starting investment amount is closer to $500. It also seems that Millennials have a pretty significant knowledge gap: the overwhelming majority of respondents to the Schroder’s survey said they believe they understand investing better than the average investor, although only 32% could correctly identify what an investment company does.
Millennials’ expectations when it comes to investing are also not exactly realistic. They expect higher returns than other generations —they reported expecting a 10.2% minimum return annually, compared to 8.4% for investors age 36 and older. Millennials are also more likely to invest short-term, which is not always the best method depending upon the type of investment.
Despite Millennials’ overconfidence and steep expectations regarding investments, the vast majority (around 94%) said they want to learn more about investing. And there are plenty of resources out there. Schroder’s offers a free IncomeIQ evaluation on their website. The Motley Fool has a wide array of legit resources. Financial advisors are also incredibly helpful, although they’re not free, a likely reason that many Millennials say they would like to speak to an investment advisor, but few have actually engaged in doing so.
There is one area that Millennials are investing well: retirement. With 401ks widely available and so many employers that have automatic enrollment, more young people are saving for retirement compared to 10 years ago. Millennials have apparently taken heed of how unprepared much of the Baby Boomers generation has been for retirement—a solid indication that, given the right tools, resources, and knowledge, Millennials are committed to achieving financial stability and not making the same mistakes their parents did.
…They’re not such a lost generation after all.