Are Millennials Better Investors Than Boomers And Gen-Xers?

September 8, 2017

Poor, spoiled, disadvantaged Millennials.

The myth of the underdog youngster has been going around in the media for years.

He’s the poor schmuck who at age 32 still hunkers down in Mom and Dad’s basement because his post-graduate education only fetches him a position as PhD burger flipper at the Scottish restaurant chain which shall not be named.

Marriage and homeownership? Not for this guy. According to the myth, he’ll be lucky if he can dig himself out from under his student loan debt one day and afford an apartment that isn’t populated with stoner roommates and cockroaches.

However, when you take a closer look at the Legg-Mason 2017 Global Investment Survey, an in-depth annual study of investing styles, it paints quite a different picture.

Baltimore-based Legg-Mason, by the way, is a global asset management company that has conducted its surveys for the past five years, aiming to better understand investors’ hopes, fears, and motivations.

Here are some of the amazing results.

Millennials Aren’t Half As Bad As Their Reputation

The first surprise when analyzing the survey is that Millennials (18–35 years old) seem to be sophisticated investors who actually have a leg up on the older generations, the Gen-Xers (36–52) and Baby Boomers (53–71).

Only 14% of Millennials say that don’t have any savings or investments, compared to 19% of Boomers.

The generation that might have suffered the most in the financial crash of 2008 are the Gen-Xers, a cohort that generational researcher Neil Howe compares to the overlooked and unloved middle child: a full 25% of them say they don’t have any savings or investments.

Asked about their investment approach in the past three years, fewer Millennials and Boomers—11% and 9%, respectively—admit to fear-based investing than Gen-Xers with 13%.

Work, Life And Retirement Goals Achieved? Check

Millennials also seem more accomplished overall than the older generations when it comes to life goals.

More Gen-Xers (50%) and Boomers (46%) feel that they have yet to achieve their top goal of earning “as much money as I can,” whereas only 43% of Millennials stated the same.

Of course, making a lot of money may not even be one of Millennials’ top priorities.

In a subsequent question that asked which work life goals they had already achieved, 48% of Millennials said, “to work just enough to have a nice lifestyle”—a goal that didn’t even make the top five on Gen-Xers’ and Boomers’ priority lists.

When looking at Millennials’ home life goals, it becomes obvious that the stereotype of the young slacker is far from correct.

51% of Millennials found it important to “build an inheritance for my children/heirs.” 57% said they’d already achieved their goal of living on their own, 49% had gotten married, and 48% had started a family.

An astonishing 45% of Millennials already own a home.

Millennials’ attitude toward money is characterized by a frugality we don’t see in their older counterparts. As a result, getting out of debt is one of the retirement goals 37% of them have already achieved. Only 26% of Gen-Xers and 36% of Boomers claim to be so lucky.

Equally amazing: more Millennials (24%) than Gen-Xers (15%) say they’ve achieved early retirement.

Moreover, 31% of them say they live abroad (only 19% of Gen-Xers and 7% of Boomers do), and 33% of them say they own a vacation home. Only 21% of Gen-Xers and 15% of Boomers can afford that kind of luxury.

Millennials: The Most Conservative Investors With The Highest Returns

Most Millennials say they’re “very optimistic” about their investments for the coming year, whereas most Gen-Xers and Boomers state that they’re cautiously optimistic.

On the other hand, a full 57% of Millennials confess that their saving and investment decisions are strongly influenced by the 2008 crash, while a whopping 56% of Boomers state their decisions are “not at all” influenced by the crash.

The question is whether the Boomers’ carefree attitude represents forward thinking or dangerous amnesia.

Another one of the big surprises of the Legg-Mason survey is that Millennials—the youngest and purportedly least experienced group—report the highest returns (9.22%) on their income-producing investments, exceeding their expectations of 9.18%.

Gen-Xers sought more modest returns of 7.02% and got 8.14%.

On the other hand, Boomers’ real returns proved disappointing: they sought an 8.81% yield, but only received 5.66%.

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