Coming of age at the peak of the worst financial crisis since the Great Depression, millennials are often perceived as wary of the stock market. However, a new study from financial services firm MagnifyMoney suggests that they’re not opposed to investment.
Analyzing 20 years of workplace savings account data from the Federal Reserve’s Survey of Consumer Finances, the company found that millennials were the only demographic that set aside more than 60 percent of retirement accounts — including IRAs and 401(k) plans — to stocks, compared with 53 percent of Generation Xers and 52.3 percent of baby boomers.
That means millennials now have 8 percentage points more of their retirement funds invested in stocks than baby boomers, marking the widest divide since 2001. (Although individual investors’ exposure to equities has slackened over the past couple decades, the study determined that all generations in 1998 had a mean of at least 60 percent of their workplace retirement savings in stocks.)
“Younger workers are advised to be more aggressive investors,” read the study. “With decades left to save and weather market ups and downs, they can afford to front-load risk — and reward — today. Older generations, on the other hand, are advised to allocate retirement funds to less volatile assets as they get closer to retirement age.”
The study comes as the stock market continues to fluctuate, partly due to the partial government shutdown (now in its 27th day), Washington’s ongoing trade war with Beijing and concerns over how a slowdown in China would affect the global economy. Within the last month alone, Wall Street saw its worst week of trading since the 2008 financial crisis, with the Dow Jones Industrial Average marking the largest single-month decline since February 2009 and its worst December since the stock market crash of 1931.
Early millennials might also recall the dot-com bubble burst of the early 2000s, contributing to the idea that the generation is risk-averse when it comes to their hard-earned dollars.
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