Recent research by UBS revealed that millennials (defined as people between the ages of 21 and 36) are not investing in the stock market. UBS speculates that this behaviour is the consequence of millennials having nightmares about living through the 2008 financial crisis or seeing their parents struggle through the recession. They are described as skeptical about chasing markets.
The research surveyed 1,000 millennials and found that they hold an average 52 percent of their assets in cash and only 28 percent in stocks. Non-millennials, on the other hand, hold only 23 percent of their assets in cash and 46 percent in stocks.
Although the research recognizes the burdens millennials face, such as repaying student loans, which means they may not have disposable income to invest, attitudes toward the stock market seem undisturbed by cash flow needs. If millennials had new money, only 12 percent said they would invest in the market. They would rather use it to pay off debt (42 percent), increase savings (17 percent), or purchase real estate (16 percent). Even among older millennials (ages 30 to 36) who have at least $100,000 in assets hold 42 percent of that in cash.
Meanwhile, millennials are finding new areas to invest their money in more impactful ways, according to research by Merrill Lynch. Millennials, regardless of background, see business innovation as the real path to wealth. When it comes to young inheritors, Merrill Lynch finds them saying they “don’t need to be richer” and they “don’t need more”. Instead, they are asking how they can use their money in intelligent ways. They want to do something with what they have been given, and are turning to impact investing.
