According to a 2016 survey by Bankrate, just one-third of Millennials are investing. A 2017 Wells Fargo survey found that 53% of Millennials report that they’ll never be comfortable investing – and 20% have no plans to invest at all.
So why aren’t Millennials investing?
- Risk aversion: 85% of Millennials say they are conservative in terms of risk, with 52% claiming to be “very conservative.”
- Debt: There are more than 45 million people with student loan debt alone, amounting to more than $1.45 trillion. That equates to an average of $16,723 per graduate and $27,975 per borrower. In fact, 65% of Millennials wonder if they will ever be free from debt.
- Lack of knowledge: 66% of people aged 18 to 29 (and 65% of those 30 to 39) say investing in the stock market is scary or intimidating. Additionally, 17% of millennials reported their biggest source of investing confusion was knowing whom to trust with their money.
- Fewer benefits: Millennials are less likely overall to receive fringe benefits through their employer – like health insurance, stock options, and 401(k)s – and there is a lower percentage of Millennials participating in a retirement plan.
The problem? This missed opportunity equates to more than $3.3 million in lost retirement savings by the time the median Millennial reaches retirement age, according to NerdWallet. Simply keeping funds in a savings account means that Millennials can’t match the returns they could potentially achieve through investments.
That said, there are a number of ways Millennials are impacting global investing:
- Millennials are more likely to describe themselves as impact investors and are more likely to align their values with their investments.
- Millennials are three times more likely than Baby Boomers to donate to a crowdfunding campaign and 70% more likely than Gen Xers, partially due to the desire to make a tangible difference.
- The majority of Millennials (83%) are open to a broader approach to investing, including alternative strategies. This includes cryptocurrencies, as 30% of Millennials report preferring to invest $1,000 in Bitcoin as opposed to $1,000 in government bonds or stocks.
- Millennials are turning to microinvesting, with smaller investment minimums and easier market entry (through apps like Acorns or Stash).
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