Many investors felt that they came out the other side of the financial crisis in better control of their finances and a new survey revealed that the younger generations have take the most positive action in the recession's aftermath.
A majority of investors felt that as bad as the 2008 financial crisis was, they came out the other end in better control of their finances. A new Fidelity Investments survey revealed that the younger generations have take the most positive action in the recession’s aftermath.
The “Five Years Later” study examined attitudes and behaviors since the crisis began and found that 81% of Gen Y (those born between 1981 and 1988) consider themselves more knowledgeable about their finances. In comparison, only 66% of the older generations feel the same.
“While the crisis served as a wake-up call for investors of all ages, this study found Gen Y may have experienced the most positive change,” John Sweeney, executive vice president of Retirement and Investment Strategies at Fidelity Investments, said in a statement. “Gen Y remains surprisingly confident despite suffering investment losses, and especially given that many also saw the impact the crisis had on their parents, who were approaching or in retirement.”
More than half (55%) of the younger generation feels more confident as investors now compared to just 47% of the older generation. Generation Y doesn’t just feel more confident as investors, they are more confident in general now about the broader economy.
“Rather than over-reacting, Gen Y has taken a more deliberate approach to their finances, recognizing the need to assume control of their spending and investing habits, and showing a willingness to do things differently,” Sweeney said. “These are important factors when it comes to weathering any financial challenge.”
Nearly two-thirds of Gen Y reported that they save more systematically, now, compared with 54% of their elders. Even though 26% reported personal debt has increased, 71% started an emergency fund and half increased those savings, which is a better track record than the baby boomers.
“Time is the biggest driver of success for young investors, followed closely by savings rate, asset allocation and, finally, fund selection,” Sweeney added. “Time is a lever that uniquely belongs to young investors and, for Gen Y, time is on their side. This research indicates they are saving early and often, which is a critical element for a successful retirement roadmap.”