Chart: How Are Millennials Investing Their Money?
Hat tip to The Reformed Broker for this thought-provoking chart which will get your students thinking about the importance of asset allocations:
Questions for students:
Note: Equities are synonymous with stocks, fixed income means bonds, think of cash as a savings/checking account and alternatives would be alternative investments like hedge funds or private equity.
- What are the top four assets that millennials are investing in?
- Now rank the assets from highest to lowest historical return. What asset class has had the highest returns? 2nd highest? 3rd highest? 4th highest?
- In analyzing the chart, do you think that millennials are making wise decisions when it comes to investing their money? Why or why not?
- Do you think a millennial with this investing strategy could earn 10% per year? What do you think would be reasonable?
- Before deciding on how a young person should invest, what would you want to know about them?
- Excluding alternatives, what do you think is an ideal way for a young person to invest? What percentage in equities (stocks)? What percentage in fixed income (bonds)? What percentage in cash?
See what a robo-advisor would recommend as an asset allocation for your students…have them try this NGPF Interactive: Would You Trust a Robot to Make Investment Decisions?