ARE YOUNG INVESTORS AFRAID OF STOCKS?
I wrote a post earlier this year about the importance of starting to invest when you are young. I strongly believe that if more young people would discipline themselves to save every month rather than spend spend spend, we as a country would not be in nearly as bad a financial mess as we are today. Additionally, at least part of the money younger people could be saving should be in the stock market because history has shown it to be the place that gives the biggest returns over a long time period.
But I am not “young” anymore (defined as in your 20′s or 30′s) and probably out of touch with what that age group is thinking. Society has changed a lot in the last couple of decades and being that age today means living in a different world than the one I grew up in.
Yesterday I found this article that says that young people today are less likely to buy stocks and more likely to put their money in gold. Actually it makes sense, especially if you look at the chart below of the Dow from 1999 to 2011:
As you can see, the stock market has hardly gone anywhere in the last 12 years. There has been a lot of movement for sure but progress going up and staying there, not much. So just looking at this chart makes me start to understand why young people in their 20′s and 30′s might not be interested in learning how to buy stocks and that they are a solid investment option. They haven’t seen any evidence of it themselves and instead have seen only volatility.
Instead of stocks, gold is the choice for many younger investors today and taking a look at the 10 year gold chart (from Goldmoney.com) it is easy to see why:
That chart is nothing like the Dow stock chart and shows an almost uninterrupted path upwards. Add to that the fact that gold has always been seen as a hedge against chaotic times and you have another reason why gold is so popular now.
We also have Occupy Wall Street going on right now and that movement is largely driven by youth. These are the “kids” that don’t trust our system, our politicians, or our companies. It is highly unlikely that anyone in that group would be caught dead buying stocks.
So what does that mean for the future of the stock market which has been a central part of investing for so long? I wish I knew and I must admit that I don’t like change. I don’t like people not trusting our financial system. I don’t like people changing their investment habits and choices. I don’t like the prospect of the stock market losing popularity because that is where I want to continue to invest with my discretionary income.
But in order to survive in life you have to be willing to change and adapt. Perhaps this will all blow over and the market will take off to new heights again soon. Or maybe I just need to join the young crowd and go out and by some gold coins.
