According to a recent Bankrate.com survey, an extremely small amount of Millennials are investing into the stock market. Millennials for the purposes of the survey are those between the ages of 18 and 35. Around 65% of Millennials do not invest into the stock market with the “Silent Generation” (those 71 and older) being the next highest at 59%. Within Millennials themselves, 80% of those between the ages of 18 and 25 do not invest in the stock market compared to 53% of those Millennials between the ages of 26 and 35. The question to ask is: “Why do the younger generation not invest in the stock market?”
Growing Up During the Recession:
During the beginning of the last recession in 2007, Millennials, many of whom were in high school or college, were at a key stage of growth. Growing up seeing family and friends’ families lose money, homes, and other assets to the stock market crash left a bad taste in their mouth. While the economy has been on the rise since then, many Millennials do not trust the stock market enough to risk their money. This would explain the 27% gap between the younger Millennials (18-25) who don’t invest in the stock market versus the older Millennials who don’t. Many of the older Millennials would have been in college at the time or started working. They would have been less likely to be supported by their parents than the younger Millennials who would have been in high school or lower and saw their parents’ struggles affect them firsthand.
46% percent of Millennials said the reason they forego the stock market is because they simply do not have the money to invest into the stock market. There could be a few reasons for this. The first is the fact that more people are starting to go to grad school. A study showed that there was a 3.5% increase in grad school enrollment between 2013 to 2014 and a pretty steady increase since 2004. This keeps Millennials out of work for longer meaning they stay out of the stock market for longer. The cost of paying back grad school loans also keeps Millennials out of the stock market longer. Another reason is that a recent survey showed that 49% of older graduates from 2015 felt they were employed in a job where they were overqualified. That can make Millennials feel they need to save money now and invest when they find a better-suiting job.