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- IRAs: In General Individual Retirement Accounts are highly popular tools for contributing funds that grow on a tax deferred basis. Depending on the type of IRA, the accumulation can be tax free.
- Annuities: Estate Tax The value of certain types of annuities may be included in an estate’s value. Understanding the intricacies of these inclusions is a critically important aspect of estate planning.
Millennials investors are the most fiscally conservative generation since the Great Depression, a study released by UBS on Monday shows.
Though 21- to 36-year-olds describe their risk tolerance as either conservative or somewhat conservative (34%), their average asset allocation is extremely conservative, with the average portfolio dedicating 52% to cash versus 23% cash for other investors, the study finds.
"Millennials seem to be permanently scarred by the 2008 financial crisis," said Emily Pachuta, head of Investor Insights, UBS Wealth Management Americas, in a statement. "They have a Depression-era mindset largely, because they experienced market volatility and job security issues very early in their careers, or watched their parents experience them, and it has had a significant impact on their attitudes and behaviors."
A good number of millennials, 45%, see saving money as crucial to success versus 39% of other investors. Most, however, do not see long-term investing as important, 28% vs. 52% for other investors.
In terms of where to turn to for investment advice, only 14% of millennials point to advisors, while 40% of other investors say they are open to working with professionals. In contrast, 62% of millennials are likely to turn to a partner or spouse for advice versus 55% of other investors.
The Depression Era mentality of younger investors, combined with advice they get from family members, is turning them into “a generation of savers who are skeptical about long-term investing and market chasing,” the UBS study says. "Only 12% of millennials said they would invest found money in the market.”
Still, money seems to matter to millennials, who say a household income of $220,000 defines success, and that increased funds would notably improve their happiness, specifically an additional $1 million.
“Conventional wisdom has categorized millennials as ‘entitled’ and ‘lazy’ because they have more than their parents and grandparents did. But this study counters that hypothesis,” Pachuta noted. “They’re conservative, similar to the WWII generation coming out of the Great Depression, not resting on their laurels, but rather working hard for their wealth and success, making sacrifices because they believe their goals are achievable.”
The study included information collected from more than 4,160 investors. Those in the 21 to 36 age group had at least $75,000 in investable assets.
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