'Old folks' over age 23 say recent grads are clueless about investing
Kids these days -- they know nothing about investing. At least that's what millennials and boomers think.
Just how knowledgeable are recent graduates about retirement investing? Well, it depends on whom you ask.
According to a new E*TRADE study, overall, investors don’t believe that recent graduates are all that savvy when it comes to saving and investing for retirement. But there are some striking differences in just how unprepared different generations believe those grads are.
For instance, if you ask millennials, 67 percent say they don’t believe recent graduates are all that knowledgeable. But boomers? Talk about lack of faith—99 percent of boomers say those grads are not very knowledgeable.
However, that’s not necessarily the case, since younger generations do indeed seem to be pretty well focused on that long-distant retirement day. Asked to provide advice to recent graduates, millennials obliged with these top two offerings: take advantage of a 401(k) and start a portfolio.
But even more practically, millennials, the study finds, are the only generation most likely to give the gift of a financial account to a recent grad, thus setting them off on the road to compounding interest. GenXers and boomers, on the other hand, give top billing to cash as gifts.
That interest can be the key to retirement success, according to Mike Loewengart, VP of Investment Strategy at E*TRADE Financial. Loewengart is quoted saying, “It’s understandable that retirement would not be top of mind for graduates during their college years. But as they enter the workforce, now is a great time to take that all-important first step in retirement investing, and ignite the immense power of compound interest, which is in their favor considering their time horizon. Starting to sock away even a small percentage of their paycheck now can pay serious dividends down the road.”
Loewengart also suggests that grads not only enroll in a 401(k), but do their utmost to contribute enough to get the full employer match for the “free money.” In addition, they should take advantage of any automated features in their employers’ plans, such as automatic investing, so that they aren’t tempted to time the market.
And last but not least, think long term, and don’t be intimidated by market movements that can throw off long-term goals and strategies.
BenefitsPRO related reading: