Bridget Casey understands why millennial investors tend to be risk averse. The Calgary-based founder of the blog Moneyaftergraduation.com only has to think back to how she, and many others in her age group, became acutely aware of the stock market in 2008.
“A lot of us came of age during the financial crash,” Ms. Casey, 32, says. “I was in university when it happened. Even though I didn’t lose any money and didn’t lose a house, I do remember all the doom and gloom in the newspaper that gave the impression that the stock market is scary. It made investing look really dangerous.”
Ms. Casey overcame her fear after she started reading, and then writing, personal finance blogs after graduation. Many of her peers still avoid the markets, though they are saving. In a 2017 Ontario Securities Commission report, four out of five millennials reported putting money into a savings account, often after receiving a paycheque. Where millennials do fall short, however, is with investing.
The same study reports that only half of millennials – those born between 1981 and 1996 – are investing and they’re holding a larger amount of their savings in cash, compared with other generations. Fear is a factor, as 57 per cent of non-investors report being afraid of losing money. Since millennials have long time horizons, where assets can grow, financial experts say that putting money away in a low-return savings account is a money-losing strategy.
The millennial money dilemma
It’s a myth that millennials don’t know the value of money, says Rick Headrick, president of Sun Life Global Investments, but the financial pressures on this generation are intense. “It’s more difficult to obtain money and grow it,” Mr. Headrick says.
Besides witnessing the 2008 financial crash, many millennials have graduated with student debt, and have entered an economy where part-time and contract employment is common. They also have to deal with sky-high real estate prices in many of the largest Canadian cities, he says.
Ensuring millennials can balance all of those competing needs wonʼt be easy, he says, but having saving and investing goals and a solid financial plan can help.
“Speak with a financial advisor,” Mr. Headrick says. “Have an open conversation about objectives. Most people will find that their situations are unique as individuals, but they are not exclusive. The decisions they are grappling with, advisors have helped other clients with.”
More financial literacy
In the longer term, Mr. Headrick says itʼs essential to support improved financial literacy for those in Generation Z, who are currently in high school or starting university.
To that end, Sun Life Global Investments is the title sponsor of FuturFund, a non-profit organization founded by Toronto-area students Katherine Tang and Sara Raza.
Back in 2014, when Ms. Tang and Ms. Raza were in Grade 12 and preparing for university, they saw a need for financial education. “I felt like I had no clue how to budget, pay my credit card bills or manage student loans,” Ms. Tang says. That year, they planned a one-day financial literacy conference for 100 high-school students.
The FuturFund organization has grown and incorporated as a not-for-profit earlier this year. FuturFund hosts workshops for young people, ages 14 to 22, and it also runs online education campaigns, advocates for better financial literacy, plans events and has a scholarship for Grade 12 students.
While FuturFund turns to organizations such as Sun Life Global Investments for expertise (Mr. Headrick sits on its advisory board), Ms. Tang and Ms. Raza ensure young people steer the ship, something rare for a Canadian financial literacy organization. “We are a by-youth-for-youth organization,” Ms. Raza says.
When it comes to investing, Ms. Tang says that starting early is key, even if it’s five dollars a week from a part-time job. “Our main advantage is that we have time,” she says. “Compound interest is a magical thing. Now is the time that we should start investing and get into that habit.”
For Ms. Casey, managing investment risk means thinking about where she doesn’t want to lose money – in her young daughter’s registered education savings plan, for example – while also keeping the long game in mind. “It is good to be a bit more aggressive when you’re young,” she says. “You do have time on your side. You do have the ability to recover if anything were to go down.”
Advertising feature produced by Globe Content Studio. The Globe’s editorial department was not involved.