Gen X and Y's Investing Confidence May not be Justified

The MFS Investment Management Investing Sentiment Survey found 42% of Gen X/Y investors reported they increased the amount they contributed to their IRAs/401(k)s in last 12 months; MFS’ 2010 Client Confidence Survey showed only 30% of Gen X/Y reported a net increase to tax-deferred retirement accounts since 2008’s economic downturn. In addition, 51% say they increased the amount saved in non-retirement accounts, a greater percentage than older generations.   

More than one-third (36%) of Gen X/Y investors report a net increase in willingness to take on increased risk, more than any other age cohort. More than half (55%) of Gen X/Y investors agree that an effective portfolio should always include a sizeable portion of international investments, more than Boomers (40%) or those aged 65+ (36%).   

Forty-seven percent of Gen X/Y disagreed with the statement “I will never feel comfortable investing in the stock market,” an improvement in sentiment over MFS’ 2010 survey, which showed that 39% disagreed with a similar statement.  

However, despite a median 23 years until retirement, 61% of Gen X/Y reported being more concerned than ever about being able to retire when they thought they would. Forty-five percent of Gen X/Y agree that they are overwhelmed by all the different investment choices available.   

Forty-two percent say their need for financial advice has increased in the past year – far more than Boomers or investors aged 65+.   

The survey also found Gen X/Y investors on average had a lower percentage of their portfolios in equities (34%) than older generations (Boomers, 36%; 65+, 38%). Gen X/Y reported on average a higher percentage of their portfolio in cash (30%) than older generations. Twenty-two percent of Gen X/Y report their top investing goal is protecting principal/not losing money. Seventy-one percent of Gen X/Y report inflation as a primary concern, but have 30% of their portfolios in cash.