Tags: Gen Y | Zhang | stock | invest

MarketWatch's Zhang: Gen Y Expects A Bleak Future

By John Morgan   |   Thursday, 25 Jul 2013 08:10 AM

Members of Generation Y, who are on the ascendancy in one of the largest generational transfers of wealth ever, fear the stock market because they have already seen economic meltdowns and a lost decade in their short lives, according to MarketWatch columnist J.J. Zhang.

A recent MFS Survey found that 40 percent of Gen Y, defined as those born in the 1980s and 1990s, agreed with the statement "I will never feel comfortable investing in the stock market," Zhang wrote.

Among the Gen Y investors surveyed, 54 percent were overwhelmed by available choices, 47 percent said they procrastinated on investment decisions, 54 percent were worried about when they might be able to retire and 30 percent said their primary objective is protecting their principal.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

"While protecting principal is no doubt important, excessive risk aversion does not lend well to long-term investing: after all, no pain, no gain," Zhang noted.

Research firm Iconoculture estimated Gen Y consists of over 76 million people with almost $900 billion in spending power.

While the previous generation of baby boomers experienced the United States' unprecedented prosperity and rise as the world's supreme superpower, Gen Y has had perhaps a polar opposite experience.

"In contrast, the future outlook for Gen Y is that of a nearly bankrupt nation, rising global competition from emerging countries, crumbling infrastructure and insolvent retirement and welfare programs, among others ills," Zhang wrote.

"For this generation, financial security is a fragile hope due to high educational debts, stagnant upward social mobility and poor employment prospects."

Zhang's prescription for investment success by Gen Y? He suggests they start retirement planning early in light of the likelihood that their Social Security guarantees, employment security and wage-growth prospects will not be as strong as those of baby boomers.

He added that Gen Y does have a few recent investing advantages that earlier generations did not have in their youthful days — availability of exchange-traded funds, online discount brokerages, real-time financial information and computer-aided portfolio rebalancing capabilities.

A recent survey by SaveUp, a national online financial rewards program for saving and paying down debt, estimated that Gen Y, also known as Milennials, have close to half of their obligations, 48.4 percent, in non-asset-building loans, which is considered "bad debt."

Bloomberg reported that average incomes for Gen Y has fallen 8 percent since December 2007.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

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