When most people my age get up every morning, they’ll flip to the Twitter and Facebook apps on their phones. I am one of the few that I know of who wakes up and almost immediately scrolls to the stock ticker apps on their phones, to (hopefully) be excited by big news or green, positive numbers.
I, by no means, am an expert on how to read financial reports, how to look at economic trends, and how to handle money. In fact, my introduction to finance class is one of the worse grades I’ve received within my undergraduate business school career, but I do believe that I understand investing somewhat on a decent level.
Unfortunately, the millennial generation that I identify with struggles to invest. We have all these smart devices, but that doesn’t mean we’re making all the smart decisions.
Investing in the stock market does not require a B.A. in business. We understand basic algebra. We know what money is. So why don’t we put the two together?Less than a quarter of the Millennial Generation invests money in the market.Why?
I asked a group of 18–24 yr olds around my university to take a brief survey asking about investing habits. Here’s a small summary of what I found interesting.
There were 259 respondents and 2/3rds of the respondents were 20–22y/o. 97% of respondents were 18–26 y/o.
19.3% (50) of the respondents “personally put money into financial investments.” That’s less than one fifth, which was extremely disappointing to me, but not so surprising after seeing results from the survey.
Of the active fifth of respondents, 54% (27) of them invest in individual stocks, and 48% (24) in mutual funds, among other options such as gold and bonds. When asked why, people stated reasons such as “to save for the future,” “to save for retirement,” and “it makes an impact later.” My personal favorite answer was “to make sick bank!!” — props to that individual. I hope you end up with “sick bank” sometime in your future.
Here’s what I found interesting- when asked if people had taken some sort of formal education regarding finances, only 24% of the investing group replied with a “yes.” So where did the other 76% of respondents learn from? A majority of us surveyed are still in schooling age, so we’re not very aware of 401ks. My hunch? Parents.
Before we dive further into that, let’s take a peek at the 81% of the respondents who don’t invest funds. Of those 209 individuals-
- 57% (119)of them said they “don’t know anything about it.”
- 52.6% (110) just flat out “don’t know how to start.”
- 16.3 (34)believe the “market is too scary/volatile."
Other options people agreed with were not being interested in stocks, the market requiring too much attention, and that banks are safer.
Here’s where it gets fascinating, and also where I believe I made a crucial mistake in my survey, as I didn’t ask further questions about parents. 146 or 71% of the surveyed who don’t put their money into market investments are certain that they have parents that do put money into investments.
So what happened? Why are so many of us left in the dark about this opportunity to greatly enhance our future?
Is it an intellectual disconnect?
I don’t think so. We’re capable of understanding compounding and exponents. We all passed algebra (or so I hope).
Is it a hole in formal academia?
Maybe. I know in middle school I went to a short bootcamp-like institution where we played games to learn budgeting and investing in the market. Not everybody has that opportunity, and I think it would be great for everyone, but that’s not the driving reason I find myself investing.
Is it our parents just not telling most of us about the benefits of investing while we’re young?
Honestly, I think this may be where the problem lies. We don’t really need a formal education to realize the benefits of the market. When I was young, and to this day, I remember my dad always talking about how I should at least pay attention to the stock market. Over the course of years, he walked me through what happens, and though he definitely doesn’t know everything about the market, he knew enough to teach me that it’s a place where some of my money should belong.
We all know parents have a huge influence on our lives, but our parents teach us to put money in our piggy banks when we’re young. They teach us to budget with allowances and hopefully wash cars to earn money for that Gameboy game that’s coming out. I wonder what would happen if they taught each and every one of us to at least consider investing in the market.
Investing could also be more of an age thing. Mid-twenty year olds don’t have too much money to set aside. By 30s and 40s, investing becomes more attractive as you likely have more capital, and it may feel like the “mature or responsible thing to do.” But the earlier we take advantage of Einstein's "8th wonder of the world" (compounding), the better.
I’m an intern right now, and I can’t say I’m earning boatloads of money, but I try to find room in my budget to carve out a couple hundred bucks a month towards investing. I make it a priority. I honestly believe that many college aged students with paid internships should try to tuck away $100 a month into some investment account.
Maybe with the advent of technology, we can figure out a way to educate this generation. I hope so. If we can be taught to easily invest using the technology we're already glued to now, it can pay off big in the future.
But if our lack of investing habits continue, we may not be retiring for a long while.
What are your thoughts?
