Financial advisor, Russell Gaiser was featured in a recent Yahoo! Finance article discussing millennial retirement strategies. Russell points out the poor investing moves millennials are doing that can harm their retirement savings. Here is what Russell had to say about millennial retirement savings and why they seem to struggle.
“The average asset allocation for millennials is far too heavy in cash for retirement accounts because of the long time horizon to use the funds.
Best allocation?
In addition to the cash allocation at 33%, millennial workers said the rest of their assets were divided up like this, according to the survey:
- 31% in equities
- 16% in fixed income
- 14% in target-date funds, which often include stocks
- 6% in other, unspecified assets
That’s way off, said Gaiser, who said the ideal allocation for equities at this age would be 65% to 100%.
“The best asset allocation for 35+ depends on the savings rate, risk tolerance, and retirement income sources,” he said. “An appropriate asset allocation for this age group could still be aggressive, 80% stock, 20% bonds.”
‘Lack of knowledge about the markets’
There’s a lack of knowledge about the markets. In the short term, it may seem like the right decision. But in the long term, the markets outpace inflation and the cash investments won’t provide returns as high as the markets.
“There is a disconnect between young people and financial advisors. There are trust issues where people may trust Google for financial advice more than an advisor.”
You can read the Millennial Retirement, Poor Investing Movers article here.
