When it comes to the U.S. stock market, millennials can't even.
That's the conclusion of a
Goldman Sachs Group Inc. survey that found only 18% of the young adults trusted the stock market as “the best way to save for the future.” More than 20% of the respondents said they didn't know enough about it, while another 16% said stocks are either too volatile or the marketplace isn't fair for small investors.
American demographics are shifting, and Wall Street is taking notice. Millennials, usually defined as those between the ages of 18 and 34, are entering their prime savings years as the baby boomer generation heads toward retirement.
“Millennials will become the most important financial generation in America and the industry will have to adapt to meet their needs,”
Goldman Sachs analysts Conor Fitzgerald and Sarah Cha wrote in the survey.
Goldman Sachs questioned 752 people in the age group about issues ranging from homeownership to privacy and payment preferences. The margin of error in the poll was 3.5%, according to the firm.
While young adults have witnessed a bull market in which stocks have more than tripled since 2009, they are also exposed to voices from
Federal Reserve Chairwoman Janet Yellen to billionaire Warren Buffett cautioning about stock-market valuations. The market's composition has also changed with the advent of high-frequency traders, dark pools and even a novel form of market manipulation called “spoofing.”
DEBT, BITCOIN
Goldman Sachs presented other tidbits about the younger generation, among them that they want financial advice quickly. About 43% of the survey participants said they wouldn't spend more than an hour getting guidance on an investment, while 13% of them said they wouldn't seek out advice at all. Most also ask their parents how to handle their money.
In the event they came into a sizable sum of cash, almost half said they'd use it to pay down debt, which may not be surprising considering they're shouldering more than $1 trillion in outstanding student loans. About two-thirds said they check their finances at least once a week. More than half of them said they'd never use Bitcoin.
Millennials' distrust of the stock market comes as they are about to have a bigger impact on the investing world. They have surpassed the baby boomer generation as the largest U.S. population group, according to data cited in a
Citigroup Inc. report in May.
Adults born between 1981 and 1997 shouldn't have a “visceral dislike” for stocks because they didn't lose money in the two bear markets since 2000, Tobias Levkovich,
Citigroup's chief U.S. equity strategist, wrote in a May 18 report.
People move into their “savings years” within the 35-39 age range, New York-based Mr. Levkovich wrote, and the new crowd will eventually provide support to share prices.
Right after they move out of their parents' basements.
