In the minds of millennials, saving up for a home and paying down debt seem to take priority by far over investing.
This is according to the Missing Out: Millennials and the Market report by the Ontario Securities Commission, which surveyed more than 1500 Ontarians aged 18 to 36 about their feelings towards saving and investing.
This age cohort has been called the most fiscally-conservative generation since the Great Depression and currently makes up more than a third of the Canadian labour force. Of the group surveyed, 80 per cent have savings accounts, and many of them either have automatic withdrawals or manually set aside money from their pay cheque each month. However, only about half of those millennials are investing those savings and, of those surveyed, 42 per cent have less than $25,000 in the markets.
Saving for a home, instead
More than half of millennials who don’t invest say they’re using their savings for other things, such as saving up for a home. And while one third of this age group already own a property, over half of those who don’t own a home say purchasing a home is one of their top three financial priorities.
The report also states more millennials are living at home in comparison to 10 years ago and they’re more likely to get a loan from their parents to purchase a place. This is easily a reflection of the struggle to find an affordable place to live as home prices rise in Ontario – most notably, in the hot housing market of Toronto.
Millennials also noted paying down debt as another major financial priority, with 53 per cent stating that it’s a reason why they don’t invest. The level of household debt for this age group has been rising at a rapid rate. Many of those who own a home feel mortgages and housing costs are leaving them cash poor and that rising interest rates will make it harder to make payments. They’re also reportedly concerned about non-mortgage debt, such as credit cards, student loans, and lines of credit.
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Majority of millennials in the dark about investment products
As mentioned, only half of the people in this age group are investing in the market as many say they are uncomfortable with common financial products.
Of those who don’t invest, 59 per cent say they don’t know how to even get started.
Millennials came of age during the recent financial crisis, so it’s likely that has shaped some of their views on investing. More than half of those who don’t invest are worried about losing their investment, and a third don’t trust big banks with their money.
When it comes to actual investing habits, millennials still remain pretty conservative. More than half would prefer lower returns for a less volatile investment. They’re also less likely to hold onto investments for the long-term, even though they are the age group that could most benefit from these kinds of plans. They are also twice as likely as baby boomers to feel stressed about their investment.
There is a bit of hope in the report, though, that millennials may change their minds about investing. Two-thirds say, while they aren’t currently putting money into the market, they will within the next five years.