Millennials have a slightly better grasp than older investors of the role fixed income plays in retirement planning and how the asset class responds to market cycles, according to a study released Monday by BNY Mellon Investment Management.
Asked by pollsters when average investors should consider adding fixed income to their investment portfolios, 36% of millennials said they did not know, compared with 45% of baby boomers, who are much closer to, if not already in, retirement.
Not only that, just 32% of boomers reported having a fixed income allocation in their portfolio, versus 43% of millennials.
Divergent thinking emerged among age brackets in the role fixed income investing can play in retirement planning and how the asset class responds to risk.
For example, 80% of boomers insisted that fixed income investing was intended only for retirement planning, compared with 70% of both millennials and Gen Xers who held this view. BNY Mellon said this suggested that younger investors may see more opportunity in the fixed income space beyond long-term retirement planning.
In addition, while 65% of millennials surveyed said all bonds provided the same level of risk, 76% of boomers believed the same thing.
“This research demonstrates that regardless of age there remains confusion around fixed income investing, as well as the important role it can play in long-term financial planning, Liz Young, marketing strategy director at BNY Mellon Investment Management, said in a statement.
“The data also suggests the role financial advisors can play to more effectively communicate how a fixed income allocation can help provide a steady stream of income for a variety of personal circumstances and across economic cycles.”
Engine Insights’ Caravan Surveys conducted the national survey in July among 1,003 men and 1,004 women 18 and older across a broad range of age, geographic location, education level, ethnicity and household wealth.
The study identified gender differences around the topic of fixed income and appetite for risk between men and women.