Investment Options For US Millenials

Early money management is crucial for any investment, but the options are overwhelming. There are retirement funds, index funds and then there are other investment vehicles that allow you to be more hands on with how your money is invested.

With the memory of a time when the S& P 500 lost half its value, millennials are hesitant to invest in stocks as a risky financial instrument. A Bankrate Survey found that in 2016 only 33% of people under 30 owned stocks largely due to lack of funds and the losses inflicted by previous generations – an experience that made them fearful invest money in stocks.

The one downside is that millenials are more hesitant to invest for long-term savings in stocks. If you are looking to get them to invest and think about retirement, you have to focus on the long term, not the daily stock market and economic volatility. They set aside money for five years or less, and they set aside money for longer-term investments, rather than riding the ups and downs of the market with shorter term saving account investments.

Different investment options should be considered at different life stages. For example, to meet short term goals such as setting up an emergency fund or saving for a home, liquid, conservative assets including cash and money markets are best. Long-term investment options that are important for wealth building include individual stocks, growth index funds, ETFs, and target funds. Millennials should try their best to invest and save for a retirement fund which can last for several decades.

Millennials should not invest in index funds if their investment time frame is short. They can invest in investment trusts to avoid picking shares and reduce the impact that an investment outcome has on your entire portfolio. Risk-averse millennials should consider mutual funds.

According to a survey by the Institute, millennials are more interested in knowing how their peers invest. They purchased their first mutual fund at age 23, compared to 67 for higher income households. Clutch found that 45% of millenials have invested or are building a pension fund.

Knowing which investments to make can seem like a near impossible decision as there are so many options such as mutual funds, stocks, direct shares, bonds, real estate and gold. The key is figuring out which investment route will be most beneficial for your specific situation and comfort level.

  1. Mutual Funds
  2. Investment funds are riskier than fixed income, but the return on your investment should be no higher for this reason. Mutual Funds are funds that represent broader market index. With Mutual Funds, your money is allocated to other investments pools designed to reflect or beat the stock market or a particular index.

  3. Stocks
  4. Stocks and bonds are some of the more popular assets for Gen Z and millennials, although these investments may be on the decline due to over- speculation on traditional assets. For example, they tend to own more stocks, like growth or dividend stocks, than newer varieties like value stocks. They also invest in innovations like SPACs (special purpose acquisition company) and new types of stocks called Memes Stocks.

  5. Cryptocurrency
  6. The Motley Fool found that millennial investors in Generation Z (ages 18 to 24) are investing in a mix of traditional and new asset classes, types of stocks, and sectors. Generation Z members are more likely than millennials to hold shares, but millennials are less likely than Gen Z investors to invest in mutual funds (47% of millennials say they invest in this type of fund compared to 35% of Gen Z investors), while cryptocurrencies are the third most common type of investment options among respondents and the second most common type of investment options for Gen Z investors. Millennial investors are also more likely to invest in blue chip stocks than Gen X investors, and men are twice as likely to own those shares as women.

  7. Life Insurance
  8. US millennials need good investments and often take that into account when buying life insurance and choosing the best options on the market. Taking out life insurance is not only good for those with terminal illness but can be a valuable tax-free lump sum. PPFs are some of the healthiest investment options as they not only build savings but provide peace of mind as well.

Wealthy millennial investors are becoming increasingly interested in sustainable alternatives, including emerging technologies and social obligations.
Millennials have traditionally engaged in three different investing methods: IRAs (29%), stocks (25%) and 401 (k) plans (53%).
Since sustainable investment funds were launched in the 1970s, according to Morningstar, it’s only natural that millennials have reached their prime investment years. The establishment of ESG investments has also improved options available to them. While millennials may balk at investing, social media tools–such as investing features on Facebook–have made it easier and more convenient for them to learn. A survey by wealth manager BlackRock found that 45% of millennials are more interested today in investing in the stock market than five years ago
Financial professionals have been increasingly curious about how millennial’s invest, given the increased attention that young Americans receive. Along one such beginner has seen an increase in confidence and explored their options.
With an average of $28,950 in student debt, most millennials must plan for decades to payoff their loans with a fear of investing in volatile stock market. One answer to this is predicting the top five years of the company’s performance before purchasing shares.