A Dramatic Shift: 50 Percent Worry MoreAbout Missing Investment Opportunities Than Losing Money
(Rye, NY) – Millennials, famous for being more risk-adverse than Baby Boomer investors, are no longer so hesitant about investing. Having experienced the first positive markets of their adult lifetime, young investors now view missing out on investment growth as a negative, and more than half of investors in their late 20s and 30s worry more about missing investment opportunities than losing money in the markets, as identified in the new Investor Mindset study by Hearts & Wallets, the preeminent financial research resource for understanding consumer savings and investing needs and behaviors.
Americans overall show a much greater risk tolerance with the goal of a greater investment return as of mid-2014, as shown by higher comfort “taking risks with your investments by accepting volatility in the hope of getting a higher return,” in the 5,500-U.S. household study (margin error of +/- 1.4%). A key finding is how rapidly younger investor households are embracing hope, as shown in the chart below:
A big turnaround for the generation that grew up during the Great Recession is their growing concern about missing out on investment growth versus the risk of losing money in the markets. The concern of younger investors about missing out on investment growth is both in comparison to their own views of several years earlier, and to older investors in 2014.
Early Careers – investors in their late 20s through 30s – lead the pack at 53 percent currently in agreement that “possibly missing out on investment growth is a bigger worry to me than the risk of losing money in the short term,” up a whopping 16 percent from 37 percent in 2012. Mid-Careers also feel more optimistic with 42 percent agreeing, up from 37 percent in 2012. Half (49 percent) of Emerging investors are more worried about missing out on growth. In contrast, only 22 percent of Pre- and Post-Retirees agree, the same as in 2012. Nationally, 37 percent of all households now agree, up from 32 percent in 2012.
“Millennials are going through a dramatic shift as they see the impact of the recent bull market and how their strategy of holding cash is costing them,” said Chris Brown, Hearts & Wallets partner and co-founder. “The good news is there’s plenty of time to build a strong investing and savings plan that works for their individual needs. Younger investors should time their purchases since 2014 saw a number of 52-week market highs.”
Top Investor Goals and Concerns
The top investor financial goal – by a wide margin and a big increase from 2013 – is to build an emergency fund, followed by having enough money to “be able to work less/spend time as I want when I am older.” To “stop work altogether/ retire” is a distant third. For households with less than $500,000 in investible assets, an emergency fund is the top goal with work less/retire goals emerging as more important.
Top investor concerns in 2014 are the U.S. economy, health care and Social Security. Despite investors feeling more confident about their own financial abilities in 2014, they feel more anxious about their financial future. Only 13 percent feel “confident, comfortable and secure,” down from 19 percent in 2013. One in three investors feels “high” or “moderate” anxiety. This anxiety is driven by mass market households with investible assets of less than $100,000. Retirees, and especially Pre-Retirees, are markedly more anxious in 2014.
Information Overload and Opportunity
Financial information overload continues to be a challenge with 51 percent feeling confused. Despite not holding the employer responsible for retirement or wanting to leave money in plan, half of Americans (47 percent) would use employer-provided resources. Receptivity to employer-provided resources is highest among Emerging investors (56 percent).
“Financial services firms have a great opportunity to shape the financial future of investors, especially Millennials,” said Laura Varas, Hearts & Wallets partner and co-founder. “Saving and retirement plan participation is trending up, driven by younger investors. Firms can continue to improve programs at work, add options and articulate how options compare outside work. Not everything has to focus on retiring from work. Younger investors want to take matters into their own hands to learn more about good savings and investment behaviors to accomplish their top goals, especially security against the unexpected and flexibility for when they are older.”
About the Hearts & Wallets Study Methodology
The Hearts & Wallets Investor Mindset study analyzes attitudes and behaviors of investor
lifestages from age 21 through post-retirement and is drawn from the Hearts & Wallets Quant Panel
Database. The Quant Panel serves as the engine for Hearts & Wallets annual reports as well as
emerging trend analysis and consists annually of more than 2 million data points from 85 families of
savings and investment questions asked during 40-minute interviews of 5,500 U.S. households. The
integrated database engine now consists of more than 30,000 U.S. households over five years.
About the Hearts & Wallets®
Hearts & Wallets LLC is the preeminent financial research resource for understanding savings and
investing needs and behaviors of American households. The company was formed by the two of
the leading research experts in retirement market trends for the financial services industry, Chris J.
Brown and Laura Varas. Their work has led to improvements in investment products, support tools
and communications for investor groups as diverse as Baby Boomers, retirees and small business
owners. The goal of Hearts & Wallets is to illuminate underserved, yet potentially very profitable
customer segments. Brown and Varas first gained attention for groundbreaking insight into
retirement money management trends collaborating for Financial Research Corporation (FRC).
Brown and Varas’ studies and conferences are must-have resources for retirement industry
strategists, product managers and marketing and sales executives. For more information, visit