Millennials invest early, think long term

Millennials are starting to invest at a much younger age than their parents’ generation, undeterred by higher tuition costs, reports of shrinking job prospects and higher housing prices, according to the TD Investor Insights Index.

Read: Advising Gen Y

On average, Gen Y investors reported making their first investments at age 20. In contrast, previous generations waited until closer to 30, with baby boomers holding off until age of 27.

The top reason Gen Y investors report making their first investment was family encouragement (41%). Boomers, on the other hand, were more likely to report an increase in income as a trigger for their first investment (36%). Even with family encouragement to start investing, more than one third of Gen Y investors said knowing where to get trustworthy advice is a challenge (35%).

In the past 12 months, the average proportion of income invested by Gen Y was approximately one fifth (18%). In an ideal world, they reported that they would invest closer to a third of their income (29%) and hope to be investing a similar amount (30%) in 10 years’ time. Millennial investors were also more likely than boomers to say they would increase the proportion of their income invested if the stock markets improve (35% and 15% respectively).

Read: Gen Y struggles to save

The TD Investor Insights Index also found that retirement planning and saving to buy a home were top of mind for Gen Y, despite today’s competitive housing market. Even with balancing student debt loads and managing expenses, half of Gen Y investors said saving for retirement was their top investing goal (50%), followed by buying a home (44%), travel (43%) and achieving financial independence (42%).

While more than a quarter of Gen Y investors said a parent or family member taught them about savings and investing (27%), almost one fifth of Gen Y investors said they learned about savings and investments on their own (18%). Embracing the do-it-yourself attitude is synonymous with the millennial generation — nearly half (48%) of Gen Y investors manage their portfolios directly online.

Read: How to entice Gen Y prospects

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.