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Millennials and Their Money - Wheelbarrows of Cash?


by Keith Klein

In a January 2014 study, UBS revealed that Millennial Generation is as financially conservative as the generation born during the great depression.  Reportedly, Millennials shatter stereotypes of fiscally irresponsible young people:  they believe in hard work, worry about parents' financial health, and define success as a combination of money, healthy relationships, and enriching experiences.  “While Millennials describe their risk tolerance as either conservative or somewhat conservative (34%), their average asset allocation is extremely conservative, with the average portfolio dedicating 52% to cash, compared to 23% cash for other investors.”

So, why are these investors so conservative?

  1. Age.   They are still young. They are dealing with a tough job market. Unless they have a desired set of skills, they have to take entry level positions that do not pay as much as they had hoped.
  2. Student Loan Debt, Credit Card Debt.  There is more debt that they have to cover. Student loan debt is at an all-time high along with credit card debt. It is hard to save and invest when you have debt hanging over your head and you are not making the income that you would like.
  3. Lack of Knowledge/Fear.  Much like the Greatest Generation, who heard the fears from their parents about the Great Depression, Millennials have heard or seen friends and families endure very trying financial situations.  Perhaps they have parents who are baby boomers and lost half of the value of their investments, and now need to work longer because they did not save enough. Combine that fear with little to no financial literacy information in our schools, conservative outcomes are almost inevitable.
  4. Information overload.  Because of technology, and amount of information that is available, Millennials have more of a “do it myself” attitude than the baby boomers, who always had investment advisors.   Combine “DIY” with an illusion of knowledge created by information overload and no practical experience, the outcomes are not as good.

What can be done to help?

I have published several articles on How to Have a Life after College and Repay Student Loan Debt, Saving for a baby, Getting Started Investing.  Have a look.  Contact me for more information. I am here to help.

Investment Advisory Services Offered Through CUE Financial Group, Inc. a SEC Registered Investment Advisor.  Securities Offered Through Foothill Securities Inc., Member FINRA & SIPC.  Foothill Securities, CUE Financial and Turning Pointe Wealth Management are not affiliated.

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