When it comes to investing, Millennials are sticking to what’s safe: Cash.
A survey out this week from Bankrate.com found that for long-term investments, Millennials prefer cash three times as much as the stock market. Instead of going for higher returns, they’re sticking money in safer savings accounts and CDs, Bankrate says.
Given how much we’re expected to fund our own retirement, some say this is bad news.
“The preference for cash and aversion to the stock market among young adults is very troubling considering this age group has the biggest retirement savings burden,” Greg McBride, chief financial analyst at Bankrate, wrote in a release. “They won’t get there without being willing to assume a little short-term price risk in their long-term money.”
As Bankrate points out, the S&P 500 has gained 17 percent in the past year, while most cash investments yield less than 1 percent.
But Millennials aren’t alone in favoring cash. Among all Americans, cash is still the preferred investment for money we won’t need for at least 10 years. But Millennials are the most likely to feel that way. Thirty-nine percent of those aged 18-29 listed cash as their preferred method of investing. That’s compared to a quarter of the whole population who said the same. Real estate investments came in second, while the stock market trailed at third.
But here’s the deal. We have so many bills to contend with every month, it’s tough to find any money left over for investments.
And data show that we are at least prioritizing saving and 401ks. Many of us even started saving earlier than our parents did at our age. So in some ways, we’re ahead.
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