Monthly Archives: February 2017

The Reason Millennials Are Nitpicky About Their Portfolios

Catch a glimpse of a Millennial fiddling with his smartphone and you might think he’s updating his social media circles on what he ate for breakfast.

But there’s a good chance he’s absorbed in something a bit more productive—checking up on his portfolio.

According to recent research, young adults are much more vigilant about tending to their investments than older generations: As many as 56% of Millennials polled in a BlackRock survey said they regularly monitor their investments, compared to 46% of Baby Boomers. Millennials spend about seven hours a month on this activity, while Boomers spend just two.

What’s spurring young adults to be so attentive to the market?

The convenience of digital technology is a major factor. Research from E-Trade suggests people under age 35 are one of the most likely demos to use online tools to monitor their investments—meaning they can review their portfolio anytime they like, instead of waiting for quarterly reports to arrive via snail mail.

“Millennials are accustomed to interacting in every aspect of their life with technology,” Tom White, C.E.O. and co-founder of iQuantifi, a virtual financial platform, told MainStreet. “With the abundance of technology tools available to them, it is not surprising that checking their portfolio is a part of their daily routine.”

But the availability of so many new, online tools to manage investments can become overwhelming. Perhaps as a result, as many as two-thirds of Millennials in the BlackRock survey said they’re keeping a large percentage of their portfolios in cash—at least until they figure out the right way to allocate those funds.

Socially Responsible Investing

You probably consider yourself to be a pretty values-driven person.

Maybe you’re rigid about recycling, always support your local firefighters, volunteer at the soup kitchen during the holidays, and try to donate a pint of blood to the Red Cross.

What you get in return is the feeling that you’ve done your part to make the world a little bit of a better place.

But what if you could give—and get back? Watch your money make a difference and give yourself an opportunity to build a nest egg?

Enter socially responsible investing, or SRI.

At its core, it’s when you weigh both social impact and financial return while choosing investments for your portfolio—and it’s become an increasingly popular way for people to invest in causes they believe in.

In 2013, $6.57 trillion in assets under management were devoted to socially responsible investing—an increase of 76% since 2012, according to the Forum for Sustainable and Responsible Investment in the U.S., or US SIF.

Nancy Somers, a Minneapolis–based life coach, began shifting parts of her portfolio about a decade ago into more SRI-oriented investments because “it’s important to me [to know] where my money is going and what it’s doing in the world,” she says. Somers invests in a mutual fund that tracks socially responsible companies, as well as bonds and other micro-lending vehicles that enable her to provide financing for people living in poverty.

“I researched a lot and found the funds that I felt were doing what I wanted [them] to do,” she says, noting that she’s owned her mutual fund for five years and has been very pleased with its performance. And her microfinance efforts “have enabled me to do one-on-one lending—I’ve gotten a lot of satisfaction out of it [and have been able to] support many people.”

Interested in putting your own money where your values are? We delve into four of the most common ways to get started with SRI, so that doing good goes from just being a warm and fuzzy feeling to something you can take to the bank.

Know Investor Optimism Hits

The Great Recession left some deep scars in the American consciousness, like a fear of overspending and an understandable wariness of the stock market. But slowly, surely, we’re regaining confidence, and new research shows that investor optimism is at a seven-year high.

According to the Wells Fargo/Gallup Investor and Retirement Optimism Index, 56% of investors say that now is a good time to invest. Compare that to 2012, when the majority said it was not an opportune time to put their money in the market. Meanwhile, slightly less than half of investors rate the financial markets as an “excellent” or “good” way to grow their assets, up from 37% just one year ago.

That confidence translates to actual investing behavior, too: As many as 78% of Americans polled currently own stocks.

This is all very promising, but there’s a discrepancy. While investors are more willing to plunk money into the stock market, they’re not as focused on planning for retirement: Although 96% of survey respondents with access to a 401(k) said they’re contributing to the plan, only about one-third have upped their retirement savings in the last year.

More than two-thirds of investors readily admit they could be saving more for retirement—so what’s stopping them? While the problem may be partly psychological, practical factors seem to be getting in the way as well. Respondents say they believe Americans have trouble setting aside ample funds for retirement because they’re struggling to keep up with daily expenses.

Other folks may be relying on Social Security—more than half said they would save more if they were certain they wouldn’t receive Social Security payments upon retirement. (Counting on government support is likely a mistake: Experts say there will soon be insufficient funds left to pay future retirees.)