Millennials are growing older, with most in their mid-30’s to their late 20’s, so for them, saving money has become more crucial than ever. And they’re apparently doing it well, according to the Better Money Habits report of the Bank of America. The study noted that on average, millennials began saving for retirement at 24 years old, a much younger age compared to Gen X’s 30, and Baby Boomers’ 33.
73% of the millennials surveyed stated that they’re saving, with 48% of them doing so every month. Out of everyone that saves, 75% are doing so for retirement, 51% for emergency funds, and 32% for buying a house.
Considering these survey results, it seems well-founded to say that millennials are pretty good with money, contrary to popular belief. However, are they also as good at investing and building wealth?
Investing vs. Millennials
Unfortunately, millennials aren’t as keen to invest as they are to save. The Better Money Habits report revealed that 42% of millennials invest conservatively, the gap evident against 38%, which is the percentage of Gen X-er conservative investors. The difference is even wider with Baby Boomer conservative investors, who were only at 23%.
Another study, this one made by Charles Schwab and Co., found that millennials held 25% of their investments in cash. Transamerica also revealed data, saying that only 20% of millennials invest their retirement money for bonds, money market funds, and other low-risk investment products.
A survey from Ally Financial showed that as high as 66% of millennials find the stock market intimidating.
Despite these unfavorable results, though, millennials can’t be blamed. When the oldest millennials reached their late 20’s around 2007 – 2009, America was hit by a financial crisis, causing stock values to plunge. In addition, they’re also burdened with student loan debts and stagnant wages, which is partly due to the decreasing labor market mobility that started in 2000 and lasted for 20 years.
Older millennials weren’t also spared from the effects of the Great Recession, where wage stagnation and the tough job market began. They had difficulty making up for their lost earnings from the early, slower years, let alone invest.
On a positive note, the recession motivated them to be more practical with money, as evidenced by their survey results. Nearly 1 in 4 millennials reported having $100,000 in savings. But how will these savings increase their wealth?
Wealth-building for Millennials
One good money habit that millennials may be overlooking is hiring a financial advisor. They can save as much as they can, spend as little as possible, but without a financial advisor, all their hard-earned money might end up useless in the long run.
A good financial advisor will help them make smarter financial decisions, like getting married, buying a house, and the like. They’ll also coach them on various wealth-building investment products, which includes highly-favorable insurance policies. They can also find ways to reduce their taxes and to achieve their long-term financial goals.
If you’re also a millennial who’s good at saving but is afraid to invest, then a financial advisor is even more beneficial for you. Though substantially saving for your retirement and emergency funds is already admirable and practical, remember that you also need to leave a legacy, hence investments that’ll bear fruit, in the long run, shouldn’t be overlooked. As Miguel Cervantes wrote in Don Quixote, “Do not put your eggs in one basket.”