Despite age on their side, millennials aren’t taking risk on savings & investments
Those aged 18-34 – millennials – want to save for a rainy day and for retirement, but they’re going about it the wrong way, according to wealth manager Brewin Dolphin.
As part of its research, it found that millennials have similar aspirations to their parents in terms of their saving needs as 78% said saving for a rainy day is an important objective.
This is closely followed by saving into a pension or for retirement (66%) and buying a house (60%).
But despite the similarities of the two generations, the approach and attitude to investing, saving and risk are very different.
Brewin Dolphin separated the broad behavioural patterns into four areas and it found the majority of millennials (62% vs 37% of parents) come under the ‘sleeper’ or ‘casuals’ camp where they’re not really bothered about, or take a passive approach to savings and investments.
In comparison, parents mainly fall under the ‘risers’ and ‘masters’ band (44% vs 28% of millennials) which means they take a relatively or very active approach to their savings and investments.
It also found that nearly a quarter (24%) of millennials said they are not really bothered about their savings and investments at this stage in their life because they have plenty of time to think about that later. Only 6% of parents feel this way.
As a result, despite the low interest rate environment, millennials prefer to keep their money in savings accounts, cash ISAs or under the mattress, with virtually none investing in stocks and shares ISAs, directly in shares, bonds or other fixed-income securities or funds.
In contrast, their parents’ generation are 27 times to have a stocks and shares ISA or invest in directly in shares, bonds, funds or fixed-income securities.
Millennials urgently need to re-evaluate investment behaviours
Nick Fitzgerald, head of financial planning at Brewin Dolphin, said: “Despite popular stereotypes, parents and children are remarkably alike when it comes to their savings and financial goals.
“Millennials are as serious about their savings, pensions and retirement as their parents are, and equally want to ensure that they get on the property ladder. Clouds however, loom, around fulfilling these savings objectives, with millennials far too laid back compared to their parents.”
Fitzgerald said that as millennials have age on their side, therefore a longer investment horizon, he would expect them to be taking more considered risk with their investments, such as equities.
“Instead, they are typically risk averse compared to their parents and seem content to put their savings into low yielding accounts or cash ISAs. For any chance of fulfilling their savings objectives and financial goals, millennials urgently need to re-evaluate their investment behaviours and, like their parents, consider higher yielding investments that could help them achieve those goals,” he said.