Investment Options are investment funds, indexes or vehicles available to Participants for the deemed investment of their Accounts.
The memory of a time when the S & P 500 lost half its value has made millennials 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 of the Great Recession that millennials experienced and witnessed – an experience that made them fearful of investing in stocks.
Although millennials are serious savers, they are reluctant to invest for long-term savings in stocks. Getting millennials to invest and think about retirement means focusing on the long term, not the daily stock market and economic volatility. They set aside the money they need for five years or less, and they set aside money for longer-term investments, rather than riding the ups and downs of the market.
Money needed to meet short-term goals such as setting up an emergency fund or saving for a home should be invested in liquid, conservative assets such as cash and money markets. Long-term investment options that are important for wealth building include individual stocks, growth index funds, ETFs and target funds. Wherever possible, millennials should focus on investing and saving for a retirement fund that can grow over several decades.
If your investment time frame is short, you should not invest your money in index funds. You can avoid the hassle of picking shares by looking for investment trusts that fit your investment goals. Risk-averse millennials should consider mutual funds that bundle a variety of investments into one package to reduce the impact that the outcomes of a stock or bond have on your entire portfolio.
Millennials are more interested in knowing how their peers invest in mutual funds than previous generations. Households with millennials at the top bought their first investment fund at the middle age of 23, according to a survey by investment firm The Institute. Clutch, a leading B2B valuation and valuation platform, found that 45% of millennials have invested in or are building a pension fund.
There are several investment options such as mutual funds, stocks, direct shares, bonds, real estate and gold. Here are a few investment options to help millennials make smart choices and ensure a stress-free future.
Mutual Funds
Mutual funds are low-cost index funds or exchange-traded funds that allow investors to spread their funds across a wide range of investments. With mutual funds, your money is invested in other investment pools designed to reflect or beat the entire stock market or a particular index. Investment funds are generally considered riskier than fixed income, but that is no reason why the return on your investment should be higher.
Stocks
Stocks and bonds are, for example, the most popular asset for Gen Z and millennials but they hold fewer cryptocurrencies than they invest in index funds or mutual funds. Gen Z / Millennial investors own more typical types of stocks such as growth, value and dividend stocks and invest in emerging types of stocks such as SPACs and Memes stocks.
Cryptocurrency
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.
Life Insurance
Taking out life insurance are one of the best investment options for millennials. The tax-free lump sum on PPFs is seen as a good long-term investment plan for both older generations and millennials.
95% of wealthy millennial investors prefer to do so, using alternative investment options such as social burdens, alternative energy sources, and emerging technologies. Millennials are getting up with information on sustainable funds that are available through a simple Google search and their portfolios are more agile, meaning they don’t have as much to invest as older investors.
Millennials don’t have to make many decisions about where to invest their money. Invest in traditional IRAs (individual retirement accounts) (29%), stocks (25%), mutual funds (14%) and the majority opt for 401 (k) plans (53%).
Since the first sustainable investment funds were launched in the 1970s, according to Morningstar, millennials have reached their prime investment years, while ESG investment options have become more numerous. While millennials may balk at investing, the availability of social media tools has 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 are increasingly curious about millennial money management, given the increasing attention that young Americans are receiving in the investment management industry. Millennial beginners gain more confidence in their skills and explore their investment options.
There is a reason why millennials tend to save and invest money with an average of $28,950 in student debt and a fear of going to a volatile stock market. But if you opt for five years of stock market performance, you’ll find that most investment options make money by investing in the S & P 500.
