Young man thinking about the future

Canadian millennials are proving to be more risk-averse than previous generations despite having more time to withstand market volatility, a recent report from the Ontario Securities Commission’s (OSC) Investor Office suggests.

This is likely because the global financial crisis of 2008-09 occurred just as millennials were entering adulthood and becoming financially responsible, states the OSC report, entitled Missing Out: Millennials and the Market, published in November 2017. In fact, 57% of the millennials participating in the survey who don’t invest said they’re worried about losing money in the stock markets, and 30% said they’re distrustful of big banks and investment firms.

With the exception of seniors over the age of 67, millennials hold a higher percentage of their portfolios in cash than other demographic groups in Canada, the report states.

Millennials also are less likely to buy and hold investments for the long term. Instead, when millennials accumulate savings, they’re more likely to set these assets aside and determine what to do with them later, according to the report.

And Canadian millennials also are twice as likely as baby boomers to feel stressed or overwhelmed by investing.

“You constantly hear that millennials are allocating their capital to experiential things, and there’s a bit less emphasis on long-term savings,” says Dave Lafferty, senior vice president and chief market strategist, U.S., with Natixis Distribution LP in Boston.

“I think it’s a mistake to say that millennials don’t believe in long-term investing at all. I think they do,” Lafferty adds. “But millennials have a little more jaded view of what the long-term equities risk premium looks like.”

Gauging Canadian millennials’ knowledge of investing*:

  • Not familiar at all, 11%
  • Not very familiar, 27%
  • Somewhat familiar, 47%
  • Very familiar, 14%

*Note: Numbers don’t add up to 100% due to rounding

Source: Missing Out: Millennials and the Market (OSC report) IE Chart