Nick Forgione
It shouldn't surprise anyone that millennials tend to approach investment planning differently than their parents and grandparents. A recent Bank of America survey of high-wealth individuals demonstrates radical differences between investors of different generations. They found that investors over age 44 have 74% of their investments in stocks and bonds, compared to just 47% of investors between 21 and 43. Younger investors are much more likely to own cryptocurrency and be interested in alternative investments than prior generations. The takeaway is that today's young professionals tend to be very open to all investment possibilities, which gives these clients a lot to discuss with their investment advisors.
INVESTMENT PLANNING QUESTIONS FOR MILLENNIALS:
What significant expenses do you anticipate coming up in the next few years?
Investment planning is highly individualized because of everyone's unique financial goals and life experiences. Some millennials are just starting to think about starting families, while others already have kids in college. This age group is also moving into the "sandwich generation" phase of life, simultaneously caring for their young kids and aging parents. Some millennials will also be paying off student loans, getting married, returning to school, starting businesses, and possibly buying their first homes in the coming years.
Discussing your specific financial goals and responsibilities with your investment advisors is critical. Your portfolio doesn't exist in a vacuum. How you allocate your investment dollars depends on those financial goals. For example, if you know you'll need to pay for your wedding or launch a new business within the next few years, there may be better strategies than tying up your cash in illiquid investments. Your advisors want to help ensure your money grows, and you can access it for those significant life events.
What are the best long-term investments for you?
While there's certainly a place for short-term investments in your portfolio, millennials should consider long-term growth. That might mean investing in exchange-traded funds and other securities, but it can also mean investing in physical property. Are you interested in owning rental buildings or other investment real estate? What about other tangible assets like gold or collectibles like art and jewelry?
What's your risk tolerance for investing?
Millennials are in an appropriate phase of life to take big swings with investments. If you take a chance on a new investment trend and take a significant loss, you still have decades of working years left to make up for it.
Taking financial risks will probably be less appealing to millennials with families to support. And some people are naturally more cautious and conservative about investing than others. Every investor is entitled to shape their philosophy about risk and to change their stance at any time.
Are your education planning and retirement planning goals on track?
Education planning might be a priority for millennial parents. If your 529 plan or other college savings accounts aren't on track for your kids' projected college costs, now's the time to look at options like super funding or opening supplemental savings accounts.
All millennials, even late 20-somethings who plan to work for another 40 years, should be thinking about retirement planning. Money you move into a retirement account now can earn compound interest for decades. How you approach retirement planning now could determine whether you can retire early. "Future You" will be grateful to "Past You" for creating a robust retirement fund.
Are there investment strategies or options that you need help understanding?
There are no stupid questions when it comes to investment planning. Successful young professionals in their 20s, 30s or 40s often come to their investment advisors as investing novices. The stock market is complicated and constantly changing. Every meeting with your advisor is a valuable opportunity to ask questions and deepen your knowledge about investing and your portfolio.
INVESTMENT PLANNING DOESN'T NEED TO BE INTIMIDATING FOR ANYONE AT ANY AGE.
Sachetta's investment planning team knows that millennial clients may have some similarities, but they also have disparate life experiences and investment goals. We see every client as unique and tailor our guidance to suit each client. Even if you're still determining investment planning, we're happy to demystify the process so you feel confident in your decisions. If you're ready to maximize your investment dollars, Sachetta's investment advisors are ready to help. Contact us today!
Nick Forgione is a Certified Public Accountant and holds a Master's Degree in Accounting from the University of Massachusetts Amherst. Since joining Sachetta in 2022 as an accountant, Nick has worked on projects on both the individual taxation and wealth management side of our company.