Pandemic spurs shift in financial, investing attitudes among millennials, Gen Z
Three in 10 households say COVID-19 changed their attitudes about saving and investing, especially among younger generations.
The economic fallout from the pandemic has been a harsh reminder of how fleeting financial security can be. Many millennials have taken that lesson to heart and not only want to save more but also learn more about the investment companies behind their funds.
Four in 10 millennials changed their savings and investment attitudes during the pandemic, according to the latest survey from Hearts & Wallets, a market research and benchmarking firm. Three key metrics are at the highest level of the past decade, reflecting an overall positive mood about finances and investing:
- More than half of U.S. households feel no or little “anxiety about their financial situation as they look to their future.”
- Nationally, nearly 30 percent of households feel “very” or “somewhat” experienced with investing.
- More than a third of households feel “very” or “somewhat” comfortable in “accepting volatility in the hope of getting a higher return.”
Millennials showed an 11 percent increase in one year of feeling experienced as investors. They also were the generation most comfortable with investing risk this year where previously this generation had been the most skittish.
Shift in saving and investment attitudes
Growing financial confidence parallels national increases in consumer receptivity about investing. This includes increases in enjoyment in thinking about money, seeing value in paying for advice and interest in fund managers. The interest in fund managers and a desire to save more saw the highest year-over-year increases, both up 6 percent. Three in 10 households say COVID-19 changed their attitudes about saving and investing, especially among younger generations.
The marked shift in saving and investing attitudes point to a financial awakening for millennials and Gen Z. For millennials, this group includes 13 million households with $1.8 trillion in assets. Millennials with COVID-changed attitudes are more likely than the U.S. national population to be interested in packaged products, more worried about missing out on investment growth and have more favorable views of international investments. These millennials also are more likely to be interested in the managers behind their funds (62 percent).
Building up an emergency fund and taking a vacation are still the top goals nationally, with more consumers citing investment and major purchase goals than in the past. More millennials mention investment goals than in the past, with their top goal being “generate current income.”
Still some concerns
Despite the overall positive consumer mood, certain concerns are apparent. More than one third of households are highly concerned about inflation and possible tax increases. Inflation jumped into the top three concerns nationally, up 11 percent over 2020. Concern about the U.S. deficit and future tax increases is up 4 percent.
“Offer income programs for wealthier customers to meet their investment goals as well as tax optimization strategies and intergenerational planning,” Beth Krettecos, Hearts & Wallets subject matter expert, recommended. “Firms can sooth concerns with product solutions that hedge against inflation.”