Market volatility appears to be “aging” the risk profile of young investors. Find out more about the latest Millionaire Corner research.
Young investors are sounding positively old in today’s climate of uncertainty and market volatility, according to new Millionaire Corner research. How is the economic environment shaping generations X and Y?
Young investors tend to be more aggressive investors, but extreme market volatility appears to be curbing their appetite for risk. According to our research, investors ages 40 and younger are most likely to make very conservative investment choices in response to market volatility.
What’s the number one choice of young investors in times of market volatility? Young investors appear most likely to buy gold, a traditional “safe haven” product, followed by cash investments, another conservative strategy, according to Millionaire Corner survey of 1,325 investors conducted in June.
More than 28 percent of young investors would buy gold in response to market volatility. Almost equally appealing are money market mutual funds (27 percent), followed by products, such as bank CDs and savings accounts, insured by the Federal Deposit Insurance Corp. (16 percent). Dividend stocks rank fourth and appeal to 13 percent of young investors.
The preferences of senior citizens seem positive “young” when compare to those of Gen Xers and Millennials. Less than 9 percent of investors age 60 and older would buy gold in response to extreme market volatility and less than 12 percent would invest in a money market mutual fund. While 17 percent of older investors would invest in an FDIC-insured product, the largest share by far (38 percent) would purchase dividend stocks as response to market volatility. (Younger investors are more keen to invest in real estate than senior citizens.)
Why do younger investors appear so risk-adverse? Millionaire Corner research shows that in addition to market volatility younger investors are extremely concerned about job security, levels of debt and the ability to save. (College costs and unexpected medical expenses are the single largest sources of debt for young investors.)