Millennials are choosing much different methods of investing money than their parents, a shift that has come about as a result of economic changes, job market development, and generational growth. After their experiences with student debt and an increasingly competitive job market, millennials are not making risky investments, at least any time soon.
“They focus on short-term needs and tend to stick with lower-risk investments,” Business Insider reported, citing data from UBS Wealth Management Americas.
The traditional “buy and hold” method that most veteran investors are accustomed to has been tossed aside by the millennial generation. In the past, employees typically put money aside for retirement and didn’t touch the fund unless absolutely necessary. However, a UBS report showed a quarter of millennials have already dipped into their retirement accounts to help them afford large purchases, while only 13 percent of baby boomers reported dipping into their savings.
Nasdaq’s Trevir Nath argued that millennials’ hesitancy to invest is costing them time and money.
“Having lived through the Dotcom Crash in 2000 and the recession in 2008, millennials remain skeptical of investing, specifically in the stock market,” Nath wrote. “By neglecting investment opportunities, millennials miss out on their biggest advantage; time. Over a long period of time, the power of compounding can result in exponential gains from your initial investment.”
These scarring economic events certainly help explain why millennials remain reluctant to invest long term. It seems that this may be yet another example of the millennial generation changing cultural norms.
