E*TRADE Study Reveals Significant Generational Gap in How Investors Perceive Recent Grads’ Retirement Investing Knowledge
- 88 percent of surveyed investors overall do not believe recent grads are very knowledgeable about saving and investing for retirement.
- 67 percent of Millennials do not believe recent grads are very knowledgeable.
- But when it comes to Baby Boomers, the number jumps to 99 percent.
Despite these perceptions, the data suggest that younger generations are in fact focused on investing for retirement:
- The top two pieces of financial advice from Millennials to recent grads are: Take advantage of a 401(k), and start a portfolio.
- Millennials are the only generation most likely to give the gift of a financial account to a recent grad—Gen Xers and Boomers prioritize cash as gifts.
“It’s understandable that retirement would not be top of mind for graduates during their college years,” commented
Mr. Loewengart provided some additional considerations for recent graduates as they enter the workforce:
- Employer matches carry a serious punch. The 401(k) contribution match that many employers offer is as close to free money as one will ever come in the investing world. It is probably the easiest way to seriously kick-start long-term investing. If one already gets a match, it may be worth ramping up contributions—even just a small amount.
- Some investing plans are automated. Avoid emotional investing pitfalls—like trying to time the market—by putting an investing and savings plan on autopilot. Automatic investing is based on the strategy of dollar-cost averaging, in which an investor commits a fixed dollar amount to a particular investment at regularly scheduled intervals. It’s a time-tested strategy that helps reduce risk by taking advantage of the natural ups and downs of the market.
- It’s more about the individual than it is about day-to-day market moves. Financial markets can get a little crazy from time to time. That’s why it’s so important to maintain a long-term point of view, defined by one’s unique goals, risk tolerance, and time horizon. Doing so can help prevent one from making sudden, ill-advised moves and allow for participation in the market’s long-term returns.
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About the Survey
This wave of the survey was conducted from
How knowledgeable do you think the nation's recent grads are when it comes to saving and investing for retirement?
|Only a little knowledgeable||40%||14%||43%||54%|
|Not knowledgeable at all||20%||10%||23%||28%|
|What advice would you give to a recent grad on managing their finances?|
|Take advantage of employer 401(k) plans||72%||58%||77%||86%|
|Start a portfolio - no matter how small||64%||59%||61%||75%|
|Spend less than you make||64%||43%||66%||81%|
|Try not to take on additional debt||57%||40%||58%||70%|
|Don't miss your student loan payments||53%||45%||47%||66%|
|Create an emergency cash fund||51%||26%||51%||74%|
|Which of the following gifts would you be most likely to give to a college graduate this year?|
|Starting and/or funding a financial account (IRA, brokerage, money market account, etc.)||29%||45%||27%||22%|
|Help with financial obligations (student loan payments, bills)||26%||39%||28%||18%|
|Financial education tools (financial planning session, personal finance books, etc.)||23%||36%||24%||12%|
|Shares of stocks, bonds, mutual funds, etc.||22%||33%||20%||14%|
|Consumer items (clothing, vacation, etc.)||14%||12%||16%||12%|
“Millennial” defined as age 25–34 // “Gen X” defined as age 35–54 //
“Baby Boomer” defined as age 55+
Automatic Investment Plans and dollar-cost averaging do not ensure a profit or protect against a loss in declining markets. Investors should consider their financial ability to continue their purchases through periods of low price levels.
The information provided herein is for general informational purposes only and should not be considered investment advice. Past performance does not guarantee future results.