When it comes to risk, millennials aren’t having any — at least for long-term savings.
So say 39% of American adults between the ages of 18 and 29, known as millennials, according to a new Bankrate report. They’re more likely than any other age group to believe that the best long-term investment is cash.
Although the S&P 500 is up 17% in the past year, 25% of Americans overall would rather keep their savings for the future — 10 years or more from now — in cash, which in most cases won’t even bring them a single percent in earnings. But three times as many millennials chose cash over the stock market, real estate, bonds or any other kind of investment.
Americans in general are wary of the market’s risks, despite its heady returns of late. Only 19% would choose it as their preferred way to invest long-term savings — and that’s up from 14% last year. Real estate came in a close second to cash, at 23%, while 14% looked to gold and other precious metals. Bonds finished a dead last at a mere 5%.
Greg McBride, Bankrate’s chief financial analyst, said in a statement that, despite investors’ small increase in moving back to stocks, “overall, Americans are still risk-averse when it comes to how they invest their money.”
He’s more concerned about millennials, though, particularly their serious reluctance to leave the relative safety of cash behind. He added, “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. They won’t get there without being willing to assume a little short-term price risk in their long-term money.”
Everyone’s reluctance to move back into an investment class they perceive as risky is likely a reflection of the latest Bankrate.com Financial Security Index, which dropped from 101.5 in June to 100.1 in July. Although an improvement over a year ago, this July’s rating of four out of the five categories that make up financial security — job security, comfort level with debt, net worth, overall financial situation and employment — fell versus June. Only job security improved.
Check out Millennials Saving for Retirement but Failing to Plan on ThinkAdvisor.