Are some generations too risk averse?

Each generation has their own unique advantages and challenges. For example, Millennials may feel comfortable with the risk of working in a start-up business or the gig economy, but often have a different attitude towards investing. For many Millennials, their first knowledge of and/or experience with investment markets was the global financial crisis market of 2007-2009 (plus additional years of economy weakness). Millennials who weren’t invested often saw their parents, relatives or friends in distress about the market crash, especially if they lost their jobs or houses. This was a formative financial moment for many, causing many Millennials to be particularly sensitive to volatility risk. As a result, it is not uncommon for Millennials to choose investments that are low-volatility (i.e. less in stocks, more in bonds or cash), or to prefer renting over buying a home. The financial behaviors of Millennials is evolving as they gain experience and insight. The problem any person or generation that makes decisions based on fear or limited experience is that the behaviors often represents a misunderstanding of risk… there are other risks that are worse than volatility, such as inflation, insufficient saving, longevity risk and emotional investing. The four risks of which all significantly increase risk of not being able to retire or become financially independent. It is important for all people to be aware of this pattern, and to educate themselves, to re-wire their brains through training, in order to develop a more effective definition of risk. The WealthStep Financial Independence video is designed to help.