New Money

Younger Generation Brings New Tactics To Investing

unpredictable, but it does have a lot of interesting proposals and applications for the future.

“I don’t see this as any different than my generation investing in the internet stocks such as Amazon, eBay or PayPal, to name a few, in the late 1990s and early 2000s. It was a new concept, many people didn’t trust its longevity or purpose, and now our lives are dictated by the internet.”

In fact, there’s an upside to the younger generation’s view on investing and the tools by which they come into it. That is, this demographic has shown little to no fear of trying something new and this, combined with the low entry barrier of today’s investment apps, has led many to jump into savings and investing.

“I will say that they are more likely to invest at a younger age and that is because of their access to information and the ability to download an app from their phone and start trading within minutes,” Munyon said. “It has never been easier to invest and coupled with the continued growth of workplace retirement plans, they are starting earlier and investing more than the previous generations did simply because it is so much more accessible now.”

Generation Of Savers

Therein lies one of the most interesting contradictions in the common perception of the young investor. For everything that’s new and changed due to technology, the age group appears to be better versed in the most fundamental canon of building wealth –starting early.

“Individuals who grow up during thriving times, that is, strong job markets and strong investment markets, tend to be more accepting of risk,” Wood said. “Those who grow up in weak job markets combined with volatile investments and poor housing markets tend to be more conservative.

“Younger individuals are investing in employer plans much sooner than previous generations. They have grown up their whole life hearing about 401(k)s and employer match. Younger individuals are also more likely to search for an adviser, planner or firm that has the exact offering and fee they are looking for.”

Another seemingly contradictory trait in the younger generation of investor is an overall aversion to risk, especially compared https://mbj799.activehosted.com/f/5 to other generations. This attitude has put a drag on younger investors growing wealth, Palensky said.

“Older investors have seen some very volatile markets but have also been through incredibly prosperous times. At a certain point some of these investors may become more conservative, but many of them are still very willing to take risks,” he said. “Younger investors, however, have seen a lot of volatility, mostly negative news from all social media outlets, and have watched their parents struggle through the early 2000’s recession, ’08 financial crisis and COVID-19.

“That doesn’t mean they aren’t saving, but oftentimes when I meet with younger investors, they have saved up way too much money in their savings account and are invested conservatively in their 401(k)s. It takes a lot of education to get them to appropriately invest.”

Advisers Still Important

Given all of these changes, the role of the financial adviser has never been more critical. Palensky said in an environment where everything and anything is open and available, the challenge for many investors lies in thinking strategically.

“The best thing to do for the majority of investors as they build their wealth is to keep the process of investing simple,” he said. “Find an adviser you trust, build out a financial plan to follow, continually add money to your investments on a regular basis and don’t let the short-term distractions deter you from your long-term goals.

“It’s easy for most everyone to make money in a bull market, and it gives them confidence that they can manage their own investments. But once the volatility hits, they almost always end