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Cash is king for young adults.
When it comes to long-term investments, nearly 40 percent of millennials (ages 18 to 29) would prefer to stash their cash in a checking or savings account, or maybe even under a mattress. That’s three times the measly 13 percent of millennials who said they’d put their money into the stock market.
That’s according to a recent Bankrate.com survey, which showed that millennials – more than any other age group – believe cash is the best investment for money they don’t need for 10 years.
It’s hardly surprising that millennials are wary of the stock market, considering they came of age during the Great Recession. But millennials’ risk-averse mentality could end up hurting them. Bankrate chief financial analyst Greg McBride said in a press release:
The preference for cash and aversion to the stock market among young adults is very troubling considering this age group has the biggest retirement savings burden. They won’t get there without being willing to assume a little short-term price risk in their long-term money.
According to Money, millennials’ preference to save cash isn’t such a bad thing. Sure, young adults will eventually have to invest more money in stocks in order to meet their future and retirement goals. But many millennials have good reasons to keep their cash close at hand, Money said.
[M]any are doing better than their parents did at their age — the typical millennial starts saving at age 22 vs. 35 for boomers. And if many young adults hold more in cash right now because they’re unsure about their job security or ability to pay the bills, there are worse moves to make. After all, it was overconfidence in the markets that led older generations into the financial crisis in the first place.
Across all age groups, the Bankrate.com survey found that about a quarter of Americans prefer cash investments, while 23 percent chose real estate and 19 percent said investing in the stock market is the way to go.
What do you need to know if you are ready to invest in stocks? Money Talks News finance expert Stacy Johnson explain the basics in this video.
What’s your preference for long-term investments? Share your comments below or on our Facebook page.