Well, according to experts, millennials are making yet another financial mistake–setting cash aside for the future.
According to a new Bankrate.com report, cash is one of the worst ways to earn any returns and will eventually catch up to millennials–especially when you consider “expected longer lifespans, rising medical costs, and uncertainty about Social Security.”
“Millennials are going to have the biggest retirement-savings burden in history,” Greg McBride, chief financial analyst for Bankrate.com told Business Insider.
“The nest egg that they’re going to have to accumulate on their own is going to be bigger than any other generation.”
30 percent of 18 to 37-year-olds thought cash investments were the best means of investing for funds they don’t plan to access for less than 10 years.
“Put your cash to work because cash is an underperforming asset,” said Ida Liu, the global market manager for metro New York at Citi Private Bank.
According to Business Insider, the average American is holding more than $32,000 in cash. Because the money is sitting in a traditional savings account, earning less than 1% in interest, the person is forfeiting an estimated $140,000 in investment returns over 30 years–using a conservative 6% return rate on stock market investments. [Brobible]
Of the nearly 40% of Americans who say they don't invest at all, more than half say it's because they don't know how to invest or think investing is too risky, NerdWallet found. Another 16% say they don't trust financial institutions, and 8% erroneously think that keeping cash is the best way to save money. (Millennials and the silent generation are the cohorts most likely to feel this way, according to the survey.)
NerdWallet also found a connection between age and income when it comes to cash savings. Older generations tend to have a higher household income and thus more money in cash. For instance, Americans with a household income below $50,000 hold on average $6,069 in cash, while those earning more than $100,000 have $69,196 in cash. [Buisness Insider]