What Millennials Think About S&P 500

 

Millennials are set to fuel the next decade-long stock market bull market. As they begin their family-building and peak earning years, stocks will surge higher than they have in decades. Baby Boomers and Generation X were around the same age when stocks were surging, but millennials are younger and less risk-averse. If they continue this trend, the S&P 500 could hit 19,349 by 2029 - a 313 percent gain from current levels. That would represent compounded annual growth of 20%, well above the historical average of 7% to 10%.

Millennials are less reliant on the stock market for returns

In terms of investment style, millennials are less dependent on the stock market for returns, but this isn't necessarily a bad thing. Many Millennials are becoming more active investors, and are likely to catch a hot IPO or a stock that might rise in value. Millennials are also more active in managing their investments, and they're more likely to seek out investment advice from experts.

As an example, regular investing means buying more shares when prices are low and fewer during high times, which is called dollar-cost averaging. Dollar-cost averaging is a proven method for building stock wealth over the long term. While many millennials are nervous about the stock market's volatility, there is a better way to invest: buy cheap stocks and sell high.

They are less focused on homeownership

While the bad economy and student loan debt are likely to be factors in the lower homeownership rate of Millennials, there are also many lifestyle factors at play. Many Millennials are delaying marriage and children for much longer than their Baby Boomer predecessors, and many of them are also more focused on having access to amenities rather than ownership. According to a study by the Pew Research Center, only one-third of millennials plan to get married before they turn 35.

Although Millennials are becoming less interested in homeownership, a large portion of them still view it as a sound investment. Nevertheless, 89% of them say they would recommend an agent to a friend or family member. The National Association of Realtors, a professional trade group representing 1.5 million members, believes this trend is due to the changing demographics of Americans. Some experts attribute this shift to demographic changes in the United States, such as the aging baby boomers and the aging, silent generation.

They prefer "safe" vehicles to invest in

Millennials have been notorious for their aversion to risk, and they prefer "safe" vehicles to invest in, such as cash, savings accounts, and other forms of plain old investing. According to a recent NerdWallet analysis, millennials could lose $3.3 million by avoiding the stock market in their lifetime if they continue to hold cash. This is assuming historical averages and future economic conditions.

Despite their risk tolerance, Millennials have also benefited from innovations in the fintech sector. Low-fee investment platforms and microsavings programs have made it easier for millennials to invest at their desired level of risk. These technologies allow millennials to diversify their financial portfolios, with investments in bonds, real estate, cryptocurrency, and precious metals. One in three Millennials in the U.S. live with their parents.

They are less likely to trust financial advisers

According to a survey by Northwestern Mutual, only 17 percent of millennials in the U.S. trust financial advisers. This trend may be changing, however, as millennials are becoming more financially literate and independent. The recent financial crisis in the U.S. forced millennials to rethink their spending habits and pay down debts. In addition, millennials have a renewed interest in life insurance.

Despite this trend, there is still a large proportion of millennials who trust human financial advisers more than robo-advisors. This is in part because of unequal access to investments and the fear of judgment. Ultimately, the best financial advice can only be given to a client if the financial adviser has a complete and accurate picture of their finances. Therefore, financial advisers need to be non-judgemental, which in turn encourages open communication between the two parties.

Millennials have weathered the Great Recession, 9/11, and the Covid-19 pandemic, and they are feeling less optimistic than previous generations. The resulting gloominess is not limited to personal feelings. Millennials' aversion to financial advisers has affected the industry as a whole. In 2016, only 50% of Millennials said they needed an adviser. In 2020, nearly seventy percent of millennials expect to hire a financial adviser to plan their retirement.