Millennials are saving their money rather than investing in tough economy: study

In this economic collapse, the United States and European stock markets are some of the scariest places to invest your money in. All of the contrarian investors, such as Peter Schiff, Marc Faber and Jim Rogers, are recommending individuals to put their money into Asian stocks as well as precious metals and agriculture.

UBS published the results of a study this week that found millennials (individuals between the ages of 21 and 36) are terrified of the stock market and are mimicking the lifestyles of their grandparents who grew up in the Great Depression. This means, they are putting their money under their mattress.

According to the study authors, millennials have been scarred from their own experiences in the labor market and have seen their parents’ home values, retirement savings and investment accounts plunge and vanish due to the recession.

Essentially, the report authors likened the mentality of millennials to the World War II generation.

“Millennials have kind of a cash-under-the-mattress thinking about saving. They feel anxious and fearful of the market,” said Emily Pachuta, one of the architects of the study, in an interview with CNN. “They fully buy into the redefinition of risk as permanent loss.”

Finance experts say that the mentality is understandable, but refraining from investing their money won’t help them in the future. The general advice is that young investors should allocate their resources into stocks. However, millennials are only putting less than one-third into stocks, while more than half of their assets have been held in cash – non-millennials maintain a portfolio of 46 percent stocks and 23 percent in cash.

What’s the solution? Getting educated, performing research and speaking to a financial professional.

“They are looking for a trusted adviser, someone to have a conversation with face-to-face,” added Pachuta. “You can’t go into the conversation thinking I’m going to change this person. This reaction to 2008 is a very emotional one.”

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