For many people, investing is something that is the obvious thing to do in order to grow their money. In fact, its how most of us plan to fund our retirement years. However, this concept is not really clicking with millennials and it is something that they are missing out on-Big time. According to a new Harris poll, almost 80 percent of millennials are not investing in the stock market at all. This is a scary number to think about but there are many factors that play into this statistic.
The poll was commissioned by Stash, an investing app, the survey asked 500 American millennials aged 18 to 34 why they are not investing. More than 40 percent of the respondents said that they feel as though they do not have enough money to invest in the stock market. 34 percent said that they did not even know how to invest in the stock market. 13 percent said they could not invest because they had too much student debt. It seems as though they are not educated on the benefits of investing in the stock market and having a diversified portfolio but there are other issues in play here.
The survey also showed that female millennials were very turned off by investing as a whole. 60 percent of male millennials said investing was confusing but three out of every four females said it was confusing. 60 percent of the female millennials said that the typical investor in their eyes was an old white man while only about 50 percent of the men agreed with this statement.
In reality, they are not wrong when you look at the statistics. There are more financial advisors that are older than 70 than there are financial advisors that are under 30. Because of this, many millennials do not see themselves as investors. They see an older generation as a generation of investors but many millennials are not able to view themselves this way.
Another major problem that millennials have with investing in the stock market is that they are accustomed to getting what they want immediately in this technology driven world. Unfortunately, the stock market is not built this way. It is a waiting game that many millenials are not used to.
This is a big factor that keeps them from investing in the stock market. They are looking for short term investments and some of the best stocks are long term investments. For a generation that wants everything immediately, the stock market may seem like too much of a time commitment for the next generation.
One major concern for millennials is their retirement savings, if they are thinking about it at all. It is not a good idea for them to avoid the stock market because they are the ones who really need to reap the rewards of higher returns for riskier assets. Investing in the stock market would allow them to build a more sustainable retirement savings.
Millennials have more options for investing than previous generations and the answer is not the stock market for everyone. Planning a retirement is hard for many workers entering the job market who have student loan debt that they cannot figure out how to pay off. However, planning for the future is important which makes not investing in the stock market a big risk and dangerous move for millennials.
While many of these kids are not investing in the stock market, there are some that are. Millennials respond to technology in a way that no other generation before them have. They grew up with technology surrounding them so technology is what they respond to.
Of the millennials that are investing, the majority of them are doing so through investing apps like Stash and Robinhood. These app make it inexpensive and easy to invest, which is not only what this group wants, but also what they need.
However, there is a down side to using an app. The app can be very helpful in good periods of investing but in rougher periods, advisors are necessary to stay afloat and the apps do not offer advisors to assist with the issues that can arise.
Even if millennials do not start investing in the stock market, they need to start investing in something for their retirement, such as a 401K. The best thing we can do for the next generation in our lives is to express how important it is to invest and attempt to educate them on the subject.
Regards,
Ethan Warrick
