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.”