Millennials Prefer Cash Over Stocks, And It Could Cost Them Millions Bankrate.com Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Our articles, interactive tools, and hypothetical examples contain information to help you conduct research but are not intended to serve as investment advice, and we cannot guarantee that this information is applicable or accurate to your personal circumstances. Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs or seek advice from a qualified professional. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. Editorial disclosure
All reviews are prepared by our staff. Opinions expressed are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including any rates, terms and fees associated with financial products, presented in the review is accurate as of the date of publication. SHARE: Hinterhaus Productions/Getty Images July 25, 2018 Taylor Tepper Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our investing reporters and editors focus on the points consumers care about most — how to get started, the best brokers, types of investment accounts, how to choose investments and more — so you can feel confident when investing your money. Investing disclosure: The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Investing involves risk including the potential loss of principal. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Millennials profess a love for cash that shows their economic skittishness, while demonstrating a risk intolerance that could cost them big-time when they stop working. A decade removed from the most devastating financial crisis in almost a century, millennials’ propensity for cash’s safety belies their need to create wealth over the long term, which is best done with a combination of stocks and bonds. Nevertheless, when it comes to how millennials actually invest their retirement savings, they are as accepting of stocks as earlier generations, despite what they might tell a pollster. The question, then, is why do millennials claim cash is their favorite asset when it isn’t? The stock market is the top investment choice
A third of Americans (32 percent) say the stock market is the best investment for money they won’t need for a decade, according to a new Bankrate survey, while less than a quarter (24 percent) say no-risk cash is their top preference. “For investment horizons of longer than 10 years, the stock market is an entirely appropriate investment,” says Greg McBride, CFA, Bankrate chief financial analyst. “Cash is not, and especially if you’re not seeking out the most competitive returns.” This is the respondents didn’t favor real estate, which registered 22 percent in this survey. Gold, bonds and bitcoin rounded out the top six, with receiving just 2 percent. Real estate is in a bit of a slump. Sales of previously owned homes declined 2.2 percent in June compared with a year prior, according to the , despite an improving economy. New home constructions and mortgage applications have also fallen, as prices have risen. That’s because homes have risen a lot. The median existing-home price was $276,000 in June, , up 5.2 percent over the past 12 months. Home values have increased on a year-over-year basis for 76 straight months. Meanwhile, the average 30-year fixed-rate mortgage sits at 4.68 percent as of July 18, , up from 4.11 percent a year ago. Millennials love cash everyone else prefers stocks
Three in 10 millennials say cash is their favorite long-term investment, while each successive generation lays claims to stocks – a third of Gen Xers, 38 percent of baby boomers and 44 percent of the Silent Generation. Millennials’ second-most desired investment, though, is the stock market, while about a fifth of everyone else selected cash. Millennials would lose out in a spectacular fashion if they acted on this bias. For the sake of simplicity, let’s assume you’re a 22-year-old worker planning to retire at 67 and you save 10 percent of your $50,000 salary in your 401(k). If you invested in a yielding 2 percent, by the time you retire. If instead you contribute to a balanced fund of stocks and bonds which yielded 8 percent annually (similar to over the past 15 years), you’d have $1.9 million. Do millennials really hate stocks
While millennials may assert their stock aversion, . Thanks to the introduction of auto-enrollment into target-date funds — which are mutual funds made up almost entirely of stocks when you’re young and then slowly shifting to bonds as you get older – millennials have a ton of exposure to the stock market. Three-quarters of the retirement portfolios for those in their 20s comprised stock funds or target-date funds, according to an report. Meanwhile, those in their 30s owned more stock than those in their 40s, who owned more stock than those in their 50s, and so on. Cash investments made up just 1 percent of the portfolio for younger millennials and 2 percent for those in their 30s. So what s going on
Millennials may avow a love for cash because they are in such desperate need for it. Half of those aged 18 to 29 say they are better off financially than their parents at the same age, according to the , compared with 56 percent of those over the age of 60. Households helmed by those under the age of 35, according to the Fed, owned , or about a quarter of the total compiled by the Silent Generation. Millennials are to record levels of student loan debt and the high housing costs, leaving them less margin for error. With little hope for a pension that half of those over 60 enjoy, have no retirement savings, and just a quarter feel as if their savings are on track for a secure retirement. Given that anxiety, millennials may say they prefer cash because it’s hard to imagine owning funds you won’t need in a decade. What Americans are earning on short-term savings
Millennials, and Americans by and large, aren’t earning that much with what savings they do own. Just 6 percent of respondents said they’re earning more than 2 percent on their cash, equivalent to the upper limit of the Fed’s short-term interest rate target. More than a quarter did not know what their receiving, while another 13 percent aren’t getting any interest at all. Millennials were the least likely to receive more than 1.5 percent, thanks to their paltry holdings, while boomers were the most likely. Why Americans aren t chasing higher yields at online banks
Americans in search of and other accounts need only consult their internet browser. Online banks, per Bankrate data, are much quicker to pass along higher yields to consumers after the Fed raises interest rates than traditional brick-and-mortar outfits. Most view a change as not worth their time, with 36 percent comfortable with their current bank and another 31 percent desiring access to a local branch. Nearly a fifth of Americans, though, didn’t know such accounts existed. “Top-yielding, nationally available bank savings accounts and money market deposit accounts can be found with very low minimum deposits, and in some cases no minimum deposit at all – making these accounts literally available to every American household,” McBride says. This study was conducted for Bankrate.com by GfK Custom Research North America on its OmniWeb online omnibus. The sample consists of 1,000 completed interviews, weighted to ensure accurate and reliable representation of the total population, 18 years and older. Fieldwork was undertaken July 6-8, 2018. The margin of error for total respondents is +/- 3%. SHARE: Taylor Tepper Related Articles