Despite almost 70 per cent of millennials now counting themselves as investors, a vast majority of them admit to being clueless when it comes to investing, according to a survey by Canadian Imperial Bank of Commerce.
The survey, which polled 1,000 Canadians between the ages of 18 and 34, found that 82 per cent of of all respondents – investors and non-investors – felt they lack financial knowledge and investing confidence.
"The good news is we see that millennials are investing their money, but the bad news is they don't feel they know what they are doing," said Sarah Widmeyer, managing director and head of wealth advisory services at CIBC.
"Their lack of knowledge is making them vulnerable to many common investing mistakes and can put them at risk for setting up bad habits that could remain with them for the rest of their years – such as buying high and selling low or constantly chasing returns."
For those who do invest, they are turning to stocks, guaranteed investment certificates, bonds and mutual funds. But 41 per cent say they don't get the returns they expect and 28 per cent find it hard to develop a long-term investment strategy.
"Young investors often think the best way to build wealth is to chase stocks, but it's virtually impossible to time the market," said Ms. Widmeyer.
"In reality, it's all about getting into the habit of putting money aside on a regular basis, choosing good quality investments and sticking to your long-term plan."
Rosemary Horwood, an investment adviser with Richardson GMP, works with a number of multigenerational families – who have millennial inheritors – and younger professionals. As a millennial herself, Ms. Horwood has seen the gap in advice that is hitting her demographic.
"One of the key problems is that this type of financial knowledge is not typically being taught in school so an individual would have to solicit this type of education on their own terms," Ms. Horwood said.
"Depending on who you talk to there isn't really a gold standard or universal truth in what they should be doing with their money, so it is very difficult to obtain the right information."
The third of millennial survey respondents who aren't in the market cited a lack of financial knowledge and the fact that investing "intimidates" them as the primary reasons they haven't begun to invest.
Other major reasons given were not having any money left at the end of the month and putting other financial priorities first, such as paying down debt or saving to buy a home.
Ms. Horwood is trying to tackle the gap in financial knowledge by hosting educational seminars that tackle the basic investing questions such as what is a stock, how to read a financial statement, how to determine your own risk tolerance – as well as provide an overview of products available to them in the industry.
Investing confidence among millennials drops even more among women as 58 per cent of women say they lack confidence when it comes to investing, compared to only 36 per cent of men.
"We clearly see a gender gap among millennials," said Ms. Widmeyer.
"I would've expected that gap among an older demographic where perhaps traditional roles are more set – and we certainly see that in research with our older clientele. As an industry we need to find out what isn't happening for younger women to feel they can be more financially fluent."
For female clients, Ms. Horwood has found that many women are more likely to resonate with visual conversations that include info-graphs and bar charts as opposed to only discussing number equations in a portfolio review.