Even only throughout the past century, we have seen many significant generational changes around the world. Young people have been fighting for shifts in societies, economies, businesses, and many other crucial sectors. They achieved their goals many times, as they always have, winning over traditionally a more conservative older generation. The trend continues today as the young generation is changing society all across the globe.
For decades, the United States has been a country where saving and investing are dearly valued by all citizens. Americans work their entire lives, buy houses, and invest in stocks. The American dream features all of the abovementioned, as the means of supporting a happy, safe, and fortunate life. However, this seems to be changing as the youth have lost their trust in stock markets significantly, leading to the potential lack of investments.
Millennials are often regarded as the most innovative and revolutionary generation we have ever seen. The exact definition of a millennial does not exist but vaguely, it refers to a person born between 1980 and the late 1990s. According to some influential research companies and media outlets, the millennial age range spans from those born from the 1970s until the early 1990s. Yet, regardless of the precise definition, these are people who are now in their mid-lives.
Members of this generation have made numerous significant changes in the behavior of societies. They have pushed for policies supporting environment, human rights and fairness for all. Many social movements that emerged in recent years are linked to the Millennial generation. They are extremely influential and companies all around the world do their best to meet millennials’ needs and demands. One thing about this age group is that they do not like commercials and are extremely sensitive towards lies and dishonesty. If a business, public personality or an organization loses the trust of millennials, they have very low chances of regaining it. This is what happened with the stock market. This process of losing trust in it has been ongoing for the past couple of decades. As a result, millennials are now extremely cautious and prefer other assets over the stocks, even in the United States. The number of young people who buy stocks has been plummeting over the past few decades and it is not without a reason.
What caused mistrust in stock markets among millennials?
The Bankrate research found some shocking facts about millennials and their approach to the stock market. The report says, that only 23% of those aged between 18 and 37 say that they will ever invest money in stocks. Only one in five said that stocks are the best place to put money that one won’t need for 10 years in. This is a significant drop from the previous generations, such as baby boomers that were all about stocks and smart investments in innovative companies across Silicon Valley and Manhattan.
Interestingly, millennials are very fond of cash as well. A significant rate, 30% of millennials said, that they would prefer investing their savings in cash rather than any other asset. This is a whopping 7% higher than the portion of millennials ready to invest in stocks. Many respondents from this age group have said, that investing savings in something one can not touch is simply unrealistic as of now. For the younger generation that uses smart technology, such a high rate of positive attitudes towards cash is interesting. On the other hand, a generation after millennials, also known as Gen Z has completely abandoned cash. They ask for a cashless future with more convenient financial services. So what is so special about millennials? What makes this young and progressive generation sound more conservative than boomers when it comes to financial matters?
What have millennials seen? The long-lasting impact of the crisis on the generation
Millennials are no longer the youngest. Just a decade ago, they would have been referred to as the most progressive generation we have seen. However, with the rise of the Gen Z, this title has gradually disappeared from the millennials’ shelves. People from this age group are now in their mid-ages, living through the career peaks or the beginnings. What we often forget about them is that they have witnessed a lot.
During the 2008-2009 global financial crisis, millennials were young but mature enough to experience what a Wall Street crash could mean for their future. Just over a decade ago, countless people lost their jobs, houses, savings, and were left homeless. Millennials remember the entire crisis, as well as its aftermath and the blame that stocks had in it. Erasing these from the memory is not easy and millennials who are already struggling to find decent employment and competitive salaries can not be asked to risk their savings. It is worth noting that after the crash, millennials have become focused on their immediate needs. Instead of planning on their future, they invest in assets that they need at a given time. An unprecedented amount of student loans is one of the examples of the changed approach.
Moreover, we should also remember that the 2008-2009 crisis was not the only crash millennials had to experience, the early 2000’s dot com crash was equally devastating and memorable for the older in the generation.
But are stocks worth a try for millennials?
Despite the heavy background of memories about financial crashes, stocks remain a very good way to invest in the future. As of now, 41% of millennials in the United States say, that they have no retirement savings whatsoever. Only 25% stated that their retirement funds are somewhat safe and sufficient for a guaranteed retirement. Almost a century of history has shown that stocks are a safe and profitable investment. The average annual return on the S&P 500 over the past 90 years is 9%, which practically could be free money for investors. However, amidst the changing attitudes towards corporations, stock markets, and the financial industry, the younger generations might find a better way to save up and guarantee their futures.