life more expensive for America’s millennials? We may
hate to admit it, but yes.
data reveal millennials don’t earn as much, pay more
for higher education and put off home purchases longer
than Gen Xers and baby boomers did.
a stunning report from the news site Axios, which shows
just how the cost of living has risen for Americans aged
25 to 34 today, vs. Americans of the same ages in the
year 1977 when adjusted for inflation. For instance, a
four-year public college in 1977 cost $8,000 vs. $20,000
today, while median incomes have stayed flat at $34,000
over the same time period. Median debt has risen from
$10,000 to $33,000, while the percent of those
30-year-olds who own homes has dropped from 48 percent
to 39 percent since 1977.
does this affect millennials’ investment, purchasing,
and life decisions? We classify millennials as those
born between 1980 and 2000. (I’m a Gen Xer, but I feel
new research, Vanguard found that most millennials
maintain high allocations to equities given their age
and financial goals despite having experienced two
severe bear markets during their lifetimes. Risk-taking
across generations, which analyzes investor behavior and
risk-taking across the 22-to-37 age group, revealed that
the typical millennial investor allocates 90 percent of
their portfolio to equities, which is consistent with
portfolio allocations, or the "glide path," of
what are called target-date retirement funds.
an investor ages, target-date funds increase the amount
of bonds and decrease the amount of equities. As you
approach 65, your bond allocation grows and equity
many company retirement plans now auto-enroll employees
and direct savings to target-date funds, which are often
the default option. Target-date funds automatically
adjust your stock exposure based on age and a targeted
retirement date. One benefit: they may help investors
avoid the impulse to time the market.
may explain why target-date funds are one of the fastest
growing segments on Wall Street, with a
set-it-and-forget-it investing program. According to
Morningstar, these funds held nearly $1.2 trillion in
assets as of Jan. 31, compared to roughly $150 billion
are also increasingly turning to robo-advisers or
financial planning software (and yes, that means they
don’t have to talk to anyone on the phone.)
seeing the rise of what we call the flex-gen
adviser," said Ed O’Brien, CEO of eMoney in
Radnor. The company is owned by Fidelity and serves
mainly financial planners.
adviser is a term we coined here as someone who serves
both millennials and boomers," he said.
generations prioritize giving back and social change in
both their personal and professional lives, including in
investing. A Fidelity Charitable report reveals more
than 70 percent of millennials and Gen-Xers have made an
impact investment — those that help achieve social and
environmental goals — compared to just 30 percent of
baby boomers and older investors.
millennials are also more likely to withdraw money from
their retirement accounts in a pinch. They’re so used
to clicking in and out of their bank accounts by phone
that they’re likely to do the same with retirement
accounts. Specifically, 37 percent of millennial mobile
payment users reported having made some form of
withdrawal from their retirement account within the past
year, compared to only 9 percent of those who don’t
use mobile payments, according to a George Washington
University study, Millennial Mobile Payment Users: A
Look into their Personal Finances and Financial
for potential investment trends, millennials want to be
homeowners, but haven’t yet switched en masse from
renting to buying homes — or baby strollers.
framed at last week’s Ned Davis Research Investment
Conference, millennials are in household formation mode,
and boomers in retirement mode. And yet, millennial
household formation has not yet translated into more
home purchases or births: the fertility rate in America
continues to fall, according to a presentation by Pat
Tschosik, U.S. sector strategist at Ned Davis Research.
and if millennials finally buy and/or remodel a home,
the implications are bullish for companies like Home
Depot and Lowe’s, Walmart and other discount and
online retailers, while demand should remain strong for
boomer-centered entertainment, software, and social
are also adopting crypto-currencies and other blockchain-related
investments — although many remain unconvinced.
will help many companies and many industries. But I can’t
explain how yet," said Hank Smith, chief investment
officer at Haverford Trust. "Warren Buffett said at
his latest annual meeting, ‘Let me know when you can
pay your taxes with bitcoin, and I’ll tell you it’s
a legitimate currency.’ "