Are Millennial Investors Making a Big Mistake? Young Hold More Cash Than The Old
Speaking as part of a panel of experts debating the investment outlook for 2019 for FT Money Show podcast, Moira O’Neill, head of personal finance at Interactive Investor, the investment platform, revealed millennial investors currently hold more cash than those approaching retirement. The statistical surprise flies in the face of the accepted investment wisdom that says young investors with a long term outlook have nothing much to fear from market downturns and should be fully invested, safe in the knowledge they don’t have to lock in losses before a recovery.
On the other hand, older investors approaching retirement are advised to hold more cash to avoid having to cash in investments at a loss if
Moira O’Neill says that the current average percentage held in cash across all of the investment portfolios held on the Interactive Investor platform, the UK’s second largest investment platform by market share, is 18%. However, that rises to 24% for the under 35s. The platform’s head of personal finance revealed several other interesting insights into the investment patterns of millennial investors. They are much more likely to be invested in tracker funds than individual stocks and are less active investors than over-65s, who own more individual stocks and look to ‘buy the dips’. The portfolios of millennial investors also have a much more global outlook than the more UK-centric older investors and they are more likely to buy stocks on non-UK stock exchanges, particularly tech stocks.
There are two main theories around why millennial investors are currently holding so much cash. The first is that they are anticipating further stock market falls over the next couple of years and hope to boost their portfolios by buying at or near the market’s bottom. The other interpretation is that they simply don’t know what to buy in
The first scenario shows joined up
The second approach is not one young
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