The Millennial generation is the most financially conservative cohort since the Great Depression, according to a new survey, UBS Investor Watch Report, released Monday by UBS Wealth Management Americas.
Thirty-four percent of Millennials, those people ages 21 through 36, describe their risk tolerance as either conservative or somewhat conservative. Their average asset allocation is 52 percent cash, compared to 23 percent cash for other investors.
The majority of Millennials say saving is the best financial advice they have received, while other generations say investing is the best.
This Depression-era mentality, combined with advice they get from family, is turning Millennials into a generation of savers who are skeptical about long-term investing and market chasing, UBS says. Only 12 percent of Millennials say they would invest found money in the market, and only 28 percent see long-term investing as a pathway to success.
“Millennials seem to be permanently scarred by the 2008 financial crisis,” says Emily Pachuta, head of investor insights, UBS Wealth Management Americas. “They have a Depression-era mindset largely because they experienced market volatility and job security issues very early in their careers, or watched their parents experience them, and it has had a significant impact on their attitudes and behaviors.”
Financial freedom is the single most important factor of success, according to 48 percent of Millennials. A household income of $220,000 defines success.
As a result of seeing their parents' retirement and investing plans seriously disrupted by unprecedented market volatility, concerns about parents rank near the top of Millennials' personal financial concerns. Twenty-one percent of Millennials are concerned about their parents' financial situations, compared to 15 percent of Gen X and 4 percent of Baby Boomers.