Despite the growing concerns that millennials will be defined as the “lost generation” and a group of people that will be worse off than their parents, reports show that those born between 1981 and 2000 will control approximately $9 trillion in assets in a few years and inherit $36 trillion by 2061.
That’s one big spicy meatball. However, financial experts say don’t expect them to allocate a percentage of that into the stock market as cash-hoarding millennials are opting to save rather than invest.
Bankrate.com released the results of a new survey that found risk aversive millennials are threatening their retirement years and other future objectives by selecting cash as their long-term investment strategy, a questionable move considering the ultra-low interest rates, rising cost of living and inflation.
Cash was also more preferable than real estate (23 percent), gold and other precious metals (14 percent) and bonds (five percent).
“The preference for cash and aversion to the stock market among young adults is very troubling considering this age group has the biggest retirement savings burden. They won’t get there without being willing to assume a little short-term price risk in their long-term money,” said Greg McBride, CFA, Bankrate.com’s chief financial analyst, in a statement. “The stock market records are getting the attention of some investors, as the percentage favoring the stock market increased to 19% from 14% last year. But overall, Americans are still risk-averse when it comes to how they invest their money.”
In addition, Bankrate.com’s Financial Security Index fell this month from 101.05 in June to 100.1 in July. However, financial security is still higher than it was a year ago – anything higher than 100 is good and anything lower than 100 is bad.
The reason why the index is still above 100 for the first seven months of the year is because job security, net worth, comfort level with debt and overall financial security have shown improvement in the past year. Furthermore, men feel their financial security has improved, while women feel the opposite. Also, savings remains a hard pill to swallow for many Americans as they don’t feel comfortable with their level of rainy day funds.
We have previously reported that a large number of Americans have absolutely nothing set aside for retirement, an emergency situation or a rainy day.
The telephone survey was conducted with 1,000 adults between Jul. 2 and 6. It contains a margin of error of +/- 3.6 percentage points.