Investing is all about timing. It turns out investor education is too.
A new study reveals while 60% of affluent millennials don’t feel knowledgeable about investing, those who learned about investing before they were 15 years old are twice as likely to feel like they understand the topic compared to those who did not.
Investopedia and Chirp Research surveyed 1,405 affluent Americans online, including 844 millennials aged 23-38. While the median household income for millennials in the U.S. is $69,000 a year, the Investopedia study talked to millennials with a median household income of $132,000.
While millennials survived the financial crisis and have witnessed one of the strongest bull markets in history, the study found that more than half are not investing. The main reason, says Investopedia Editor-in-Chief Caleb Silver, is fear.
“It’s the great dichotomy where they are confident about the future of the economy but they are pretty reticent when it comes to investing because they still have the scars of the financial crisis that have not healed,” says Silver.
But while this generation may fear the markets, the evolution of investment vehicles has made investing easier for millennials than it was for their parents. ETFs and index funds allow investors to track a specific sector or index rather than having to buy individual stocks. The rise of online advisors and robo advisors has also made it much cheaper to get in the game.
Millennials value the ‘human connection’
So, where do millennials learn about investing and keep up-to-date with financial information? Affluent millennials want to talk to professionals. The survey found that almost two-thirds of millennials believe financial advisors are the most trusted source of financial advice and information. More than half also trust financial information from books (58%), television shows (54%) and newspapers (53%).
For a generation raised on technology, Silver says the “human connection” goes a long way with millennials when it comes to money. “Being able to sit across the table and talk to somebody not just about what you are doing with my money but about holistic financial planning... that’s financial planning writ large.”
This article was first published on Oct. 4, 2019.
Joanna Campione is a producer for Yahoo Finance.