How different generations invest

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Each generation comes of age during different economic circumstances, and this can have a major impact on their later money habits. Financial professionals have identified some investing tips for certain generations that can help make their portfolios more efficient. Learn more about the investment strategies most commonly used by Boomers, Gen X-ers, Millennials, and members of Generation Z—and how you can make them work for you.

Boomer investing habits

Baby Boomers, or those who are born between 1946 and 1964, are mostly retired or getting close to retirement. But while a financial professional will often recommend moving retirement funds out of risky assets like stocks and into bonds or money market funds, Boomers haven't heeded this advice. In fact, a full eight percent of Boomers are entirely invested in stocks, while nearly half of all Boomers have a riskier allocation than analysts recommend.1

With the recent market run-up, this strategy has paid off in a big way—the number of 401(k) millionaires is at an all-time high, largely due to the number of aggressively invested Boomers. But if (or when) a downturn happens, those with too much stock exposure and no W2 income could be hurt.

Gen X investing habits

Members of Generation X, or "The Forgotten Generation," are often overlooked in discussions of investments or personal wealth. But these investors, born between 1965 and 1979, are actually more conservative than Baby Boomers when it comes to their fund choices.2 Many Gen X-ers began investing in the late 1990s and early 2000s, only to find, a decade later, that a slumping stock market meant their balances barely budged.

Gen X-ers are also more likely than Millennials to seek out the help of a financial professional. But because they're in their prime earning years, with some of the older Gen X cohort nearing early retirement, they expect quick, accurate answers from those who are managing their money.

Millennial investing habits

The oldest Millennials are nearing 40, their prime earning years, while the youngest members of this generation may still be in college. Like Gen X-ers before them, Millennials are more conservative investors than one might expect. A full 30 percent of Millennials surveyed replied that their favorite investment was "cash," not stocks, real estate, or bonds.3

Millennials are largely responsible for the rise in socially responsible investing, seeking out funds and companies with certain environmental, governance, or social goals. And with an eye toward simple investments like target-date mutual funds and exchange-traded funds, Millennials tend toward the DIY route when it comes to directing their retirement funds.

How to improve portfolio efficiency

Regardless of which generation you were born into, you can draw inspiration from some of the investment strategies used across the years. Millennials can take advantage of their long investment horizon by looking into some more aggressive stock funds. Meanwhile, Boomers may want to borrow a page from the Millennials' book by moving assets to cash to protect against market drops. And Gen X-ers can show both these generations the importance of having a responsive financial professional.


Important disclosures 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

1See CNBC, "Baby boomers, heavily invested in stocks, are putting retirement savings at risk: study," by Annie Nova, March 20, 2019

2See National Association of Plan Advisors (NAPA), "The Forgotten Generation: Understanding Gen X Investment Habits," by Ted Godbout, August 28, 2019.

3See The Balance, "Millennial Investing Habits You Can Learn From in 2019," by Tim Lemke, updated June 25, 2019.

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General Disclosures

The opinions and views in this blog post are those of the authors, and are not intended to provide specific advice or recommendations for any individual. Please consult professional advisors with regard to your individual situation.


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