Amanda Moffitt is 30, so she was just getting settled when the economy tanked.
“It was 2008, so there was a lot of concern about the stock market and what could possibly happen to your money when you invest it,” Moffitt says.
And, it turns out, that attitude has stuck among young adults.
“They are the most risk-averse group,” says Greg McBride, vice president and chief financial analyst at Bankrate. Its new survey shows that once those under 30 actually have some money to save, they’re very cautious.
“They prefer cash by a 3-to-1 margin over the stock market, for money they’re not going to need for at least 10 years,” he says.
That could be too conservative of a strategy, since savings accounts don’t keep up with inflation.
“Kind of gets us back to that Depression mindset of hiding cash under the mattress,” says David Weliver, editor of moneyunder30.com. Part of the whole problem is choice overload.
“The thousands of investment choices, and all the conflicting advice out there. A lot of it is they sit tight and do nothing,” Weliver says.
As for Amanda Moffitt, she’s wised up. She’s working to become a financial planner.
So where should millennials be investing?
We've heard the mattress is not the way to go, and saving accounts aren't much better. Young people may also simply be intimidated by the vast array of choices, or worried they don't have enough money on hand to make investing worth it. Nonsense.
We've dug back into the Marketplace archives to find some of the best advice we can offer for young (or otherwise new) investors. To start, here's a quick personal finance cheat sheet.
- What are all these investment words? Confused by Muni bonds, junk bonds and hedge funds? What does REIT stand for? What do I use to save for school? Retirement? We have answers to all these questions and more.
- Why bother investing? Young people seeing the state of the economy and saying "why even bother?" isn't new. Deep into the Great Recession, we asked a financial planner that exact question.
- Advice for new grads: A few years ago, Marketplace Money responded to a reader who was just graduating and looking to invest. Our advice? Evaluate your short- and long-term expenses, then get an IRA.
- More on mutual funds: Many mutual funds offer "quick and easy" plans aimed at first-time investors, but easy doesn't always equal better. Marketplace Money explains.
- What if I have a bunch of retirement funds? If you have a few different retirement plans, we have some tips to juggle them all.