As markets careened lower to the tune of 10% in February, millennial investors got a thrill up their legs versus their older peers.
According to a survey by Bankrate.com, 19% of millennials aged 18 through 37 said they had “feelings of excitement” during the correction vs. 8% for Generation-X and just 4% for Baby Boomers.
“If you’re a long-term investor you want to be able to buy low, and millennials had a chance to add to their retirement accounts at a lower price,” Bankrate analyst Taylor Tepper told Bloomberg. “In that sense, it’s very exciting.”
Over 25% of the giddy millennial investors reported adding to their stock holdings during the correction – far more than the other demographics.
The survey conducted from February 28 through March 1, questioned 2,287 U.S. adults, only 1,063 of whom said they have an investment account. Of that, just 30% of millennials had investments vs. 46% of Gen-X and 54% of Baby Boomers.
Bankrate’s Tepper also noted that millennials – who are disproportionately anti-Trump, saw February’s selloff as the first “Trump correction” after a massive 33% rally following the 2016 election.
Safe Space
Millennials, scarred by the financial crisis and what they saw of the recession, have been been reluctant to invest according to Merrill Edge’s Aron Levine.
“In stark contrast to older generations who are relying on outside sources for their future financial security, millennials are looking to their self-created savings years down the line,” Levine said in a December report. “Millennials place even greater trust in their own stewardship than they do in their personal relationships with their significant other and friends.”
During the financial crisis, millennials “saw their parents and grandparents suffer and struggle with either Social Security not being there or being there and not being enough,” Levine says. Thanks to that, millennials feel they “need to be relying on themselves and their own ability to save and invest.”
And of the millennials which do invest, according to the report, they don’t take big risks. 46% of millennials say they’re more financially conservative than their parents, while 35% say they’re more conservative than their grandparents!
Broke and broker
When you ain’t got nothing, you got nothing to lose
–Bob Dylan
With the average millennial college graduate carrying $30,000 in debt, and average millennial net worth standing at $10,900 (around half of what their parents were worth at the same age), it’s no wonder they’re cautious.
According to a 2017 GoBankingRates survey, 67% of young millennials (age 18-24) have less than $1,000 in savings and 46% with no savings at all.
For “older” millennials the picture isn’t much different, with 61% of those between the ages of 25 and 34 reporting less than $1,000 in savings and 41% with no savings.
During February’s selloff, investors overall kept calm – with only 6% pulling cash from their accounts. Nearly half of the Bankrate.com respondents said they felt “indifference” to the selloff, vs. 13% who were scared.
“President Trump sort of talks about [stocks] on Twitter all the time, so there’s a visibility around stock indexes hitting all-time highs,” Tepper said. “When the selloff happened, I was concerned that many people would start selling and change their behavior. But they didn’t really seem to do so.”
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