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Millenials (heart) CDs

By Sheyna Steiner ·
Monday, February 10, 2014
Posted: 9 am ET

Sweeping generalizations may not always hold up when you drill down to the fine details, but since the financial crisis, one trend seems clear: Millenials were shaken by the Great Recession.

A report out last week from the Zurich-based financial firm UBS Wealth Management Americas found that people between the ages of 21 and 36 are, in general, very conservative investors. If they plan to invest at all, only 28 percent of young people believe long-term investing will lead to success versus 52 percent of older folks.

The UBS Investor Watch survey found that young people have more than twice as much allocated to cash and cash equivalents than investors from other generations, 52 percent compared with 23 percent. Cash includes certificates of deposit and money market funds.

That echoes the findings of a 2012 survey by Wells Fargo, which found an overwhelming bias in favor of CDs over stocks among the 25-to-29 age group.

Millenials in the UBS survey were asked to qualitatively describe the best financial advice they've been given, and the importance of saving topped the charts. With safe but low-yielding investments, today's young people may be jeopardizing their retirement prospects. Rate of return is the main factor in how quickly savings compound over time. Saving is a vital habit, but it may not be possible to save enough for a successful retirement without taking some risk by investing in riskier assets because it's tough to make much of a return with low CD rates and savings rates.

Use Bankrate's return on investment calculator to see how your earnings will stack up at retirement.

Do you have CDs in your retirement portfolio?

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Follow me on Twitter: @SheynaSteiner.

Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers.


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1 Comment
Hoyt Brown
February 18, 2014 at 10:46 am


I remember when cds could be purchased for 10 years drawing 15%. This was during the Jimmy Carter presidences. Now you get practically nothing even on long term cds. Recently Pentagon Credit Union raised to 3.04% on 5 years but now they drop the return to pratical noting. Thanks for listing.