Fewer than four in 10 young adults under the age of 35 are reported to invest in the stock market, according to a Gallup poll conducted in early April. There has been a steady decline in the percentage of young adults’ choosing to invest since 2007, when 52 percent of adults under-35 said they invested money in the stock market.
The decrease since 2007 is the largest among all age groups, though Americans aged 35 to 54, and those 55 and above, also saw double-digit percentage decreases since the 2007 peak. The sharp decline in stock market participation is a clear result of the 2008 recession, which caused the public’s confidence in the economy to plummet.
“Specific reasons why young adults are reluctant to own stocks can be attributed to distinct generational concerns,” said De Anza College business professor Emily Garbe.
“I think in general, parents are now more involved than prior generations, so millennials do not see the urgency to save because large numbers now move back home until their late 20s,” said Garbe. “Without the pressure to become independent financially, millennials tend to spend more on discretionary spending and student loans.”
Student loans are an immediate concern for San Jose State University biology major Kendal Singh, 20, who said he is “focusing on getting out of debt before thinking about getting ahead financially.”
Despite financial experts encouraging young adults to invest because of the growth potential over time, attitudes toward the state of the economy still haven’t recovered from the recession.
“The economy is too unpredictable for me to risk my money by investing in stocks,” said De Anza communications major Ashley Ho. Negative attitudes toward the economy have shifted the way adults under-35 think about money; now young adults are much more likely to save money instead of investing.
“As a student, who doesn’t have much money to begin with, a savings account is the best option for me because I’m not at risk of losing my money,” said De Anza student Francisco Maciel, kinesiology. “Investing in the stock market is a volatile game, and one that I don’t have the funds to play in right now.”
Large financial losses during the recession took a toll on the public’s confidence in the stock market and the entire economy, but there are some who still believe in the investment potential of the stock market.
“The general direction of the stock market has always been up, and since 2013 stocks have made great gains,” said De Anza economics major Paul Gallegos. “The stock market is still a good way to invest, and students should invest because stocks are a great way to develop long-term wealth.”
The decrease in young adults’ confidence in the economy is just one of many factors influencing falling percentages of stock ownership. Adults under 35 are more likely to save their money or invest in real estate, according to the Gallup poll.
