This morning Fidelity Investments released the results of a new survey that shows that young investors are skewing more conservative. The “Higher Education Generational Survey” looked at the investing behavior of retirement plan participants in higher education across three generations: Y, X and Boomer.
The survey found that Generation Y investors use similar asset allocation plans to their Boomer and Generation X coworkers, with portfolios consisting of 50 percent stocks, 35 percent bonds and annuities and 15 percent cash.
This isn’t the first survey that has shown that younger investors are wary of the stock market. Earlier this year, the Merrill Lynch Affluent Insights Quarterly Survey released in January found that 59 percent of younger affluent investors described themselves as conservative investors, though the survey found that most self-described conservative investors of all ages were unaware that playing it safe could impede their retirement or investing goals.
Several times, people have commented on this blog that they prefer to eschew stocks in favor of more stable investments with lower returns. And I’ve spoken with some financial planners who report they do have clients with very low tolerance for risk who are happy — and able — to save extra money rather than try to get more aggressive returns through the stock market.
With the continuing economic uncertainty, it’s easy for investors to lose track of long-term goals to focus on volatility roiling the near-term. Without a plan to get them to retirement, they may end up with less money in retirement than they expected.
The opposite side of the coin is that many investors near retirement saw their portfolios take a huge hit in 2008.
Do you avoid the stock market or invest very conservatively? How do you plan to hit your retirement goals?
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