Recently released data from the Federal Reserve shows that the millennial generation – of which I am a member – own far less appreciating assets than previous generations have owned at a similar age.


According to the study, millennials at age 30 own just 4.6% of total U.S. assets compared to the 7.8% Generation X owned in 2002, or the 25% baby boomers owned in 1990.


There are many factors that play into this statistic, but the one that I think plays the biggest role, is what millennials experienced during their formative years. As children, millennials witnessed 9/11 and the wars that followed, and as young adults they went through the financial meltdown of 2008.


Both of these events, in my opinion, shaped how the generation views risk and uncertainty. How they choose to use money is a direct result of the fear they have of the future. A recent Global Investor Pulse survey found 59% of millennials have started saving for retirement but 65% of all assets held by millennials remain in cash. In other words, their savings are not utilizing the laws of compounding growth and as a result are stagnant.


My grandparents were part of the silent generation who lived through the Great Depression and World War II. Because of their fundamental fear of not having enough, their entire life they had a room in the basement whose walls were lined with can goods and other non-perishables. In addition, when they passed away we literally found coffee cans full of cash hidden in different parts of the home due to their misgivings about banks.


It’s amazing to me how similar both the experiences and the perspectives of these two generations are. Both have a fundamental distrust of “the system,” both are driven more by fear than opportunity, and both put more confidence in saving than investing.


Recent volatility in the market will certainly cause millennials to question the strategy of investing their savings in something that can go down so quickly. However, that risk is the very thing that allows for the exponential growth of capital required to retire with dignity. I would argue by not investing in things that traditionally appreciate in value like houses and equities, millennials are taking far more risk than those who invest in a well-diversified portfolio with long-term growth as the objective.


Regardless of your generation, this most recent market correction may be causing you to question the wisdom of investing in the market too. It’s easy to feel that way when you see your nest egg lose as much as 10% in a week. However, ask someone who left the market after 2008, or after 9/11 and never got back in if they regret that decision today. Ask the person who sold their home in 2010 because they believed it was no longer a good investment, if that plan has paid off.


As someone who personally is very risk averse, I am not belittling the fear or the apprehension in putting your life savings in something that is not guaranteed. That fear is real and often justified. But please recognize there is no such thing as a sure thing, only varying levels of risk. And generally speaking, for the past 100 years buying a home and investing in the market have both been pretty good bets.


(Past performance is no guarantee of future results. Advice is general in nature and not intended for specific situations)


– Luke Davis is the director of operations and compliance at Stewardship Capital in Independence.